The Role of Leadership in Continuous-Improvement and Lean Journeys -- What's Missing?

“What is missing from leadership in most continuous-improvement and Lean journeys?” That's the question I posed this past week to Brent Timmerman, who recently published a book entitled Starting Lean from Scratch: A Senior Leader’s Guide to Beginning and Steering an Organizational Culture Change for Continuous Improvement that addresses this topic head on. Here is Brent's complete response:

When an organization is beginning a continuous improvement and Lean journey, the leaders must be prepared to change their behaviors. It’s almost certain that some of the legacy approaches that the leaders have been previously using to manage their people will contradict the culture that they must build to facilitate a Lean journey. These mixed messages will stop the desired transformation in its tracks.

I think that you can imagine three “spaces” within the organization that must be shaped and sustained by the leaders for the continuous improvement transformation to be successful:

• The Space of Trust—this is the space of individual and collective trust relationships between the leadership and the staff; it is the “feeling” of trust within the organization. This space is crucial and foundational before the organizational journey can even commence.
• The Space for Change—this is a smaller space, set within the Space of Trust, where organizational change happens. When this space is properly formed, the people begin to support change, get excited by change, and they even want to get involved with the changes themselves.
• The Space for Continuous Improvement—this is the smallest space, contained within the Space for Change, and it consists of every continuous improvement event, activity, or effort. In the early days of a Lean journey, you must get colleagues to believe that the organization is serious about the transformation it is undertaking. As a result, the leaders must shape each continuous improvement event so that the team can be successful. When the team feels success, they start to believe. When others see teams of their colleagues succeed, they start to believe as well.

In short, the leaders cannot simply delegate to others the support of a Lean journey and expect success. This requires truly a shift in the culture of the organization, and the culture is defined by the behaviors of the leaders. Before the leaders can ask the staff to change, the leaders must be prepared first to change some of their own approaches to management.

What do you think of Brent's perspective? Have you seen instances in which leadership behavior completely contradicts the culture the organization is trying to foster through a Lean initiative?

What Is the "Toyota Template"?

Lean implementations, operational excellence initiatives, and even specifically, the Toyota Production System (TPS) are often misconstrued as simply a methodology focused on the formulaic implementation of tools. In a recent book entitled The Toyota Template: The Plan for Just-In-Time and Culture Change Beyond Lean Tools, the author -- Phil Ledbetter -- posits that the building of TPS, with the goal to eliminate waste, evolved as problems were encountered and solutions put in place and a wonderful byproduct of it was the growth of a problem-solving culture throughout Toyota that is unique in the business world. I spoke with Phil this month and asked him: “What is the Toyota template and how does it help sustain a Lean implementation?” Here is his response:

The Toyota template is about the relevance of the Toyota Production System to any type of business today. It succinctly identifies the key elements, places them in a logical, sequential or of implementation, and explains how each contributed to the formation of the Toyota culture. It's a blueprint for any business interested in a true lean transformation. The gold standard is Toyota and my book, The Toyota Template, demonstrates how businesses can use the "template" to arrive at a truly Lean, just-in-time production system.

Specifically, The Toyota Template explains the critically important elements of the Toyota Production System, analyzes the sequence of implementation as the system developed, and places these elements in a logical order of implementation based on the history and current knowledge. In addition, it addresses the effect of each element on the culture and some of the reasons for Lean implementation failures, including the problem with the value stream mapping.

Fujio Cho, Ohno protege' and former Chairman of Toyota Motor Corporation, has said, "Many good companies have respect for individuals, and practice kaizen and other TPS tools.... But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner, not in spurts." The Toyota Template shows exactly how to develop this system. 

What do you feel are the major hindrances to a successful and long-term Lean implementation? 

Lean and Agile Software Development: How Do We Make It Happen?

Recently, I had the chance to speak in person with Michael Levine, author of a new book published this past December titled A Tale of Two Transformations: Bringing Lean and Agile Software Development to Life. His book provides entertaining and thought-provoking guidance on making organizational change.

I asked Michael about one of the paradoxes of bringing Agile software development into organizations -- Although Agile preaches the centrality of the self-managed team, in practice many Agile migrations are imposed top-down by strong-willed executives. Can this really work? Here is his response:

Organizations vary dramatically from each other, and these variations must drive the approach to introducing Lean and Agile techniques effectively. An organization that is performing adequately and for which the risk of disruption is high must be addressed differently than an organization that is performing unacceptably and for which change is urgent.

That is why I draw out two approaches to change: Drive People, a top-down approach focused on processes and tools, and People Driven, an enabling approach focused on people, learning, and organizational design.

Ultimately agile success depends on becoming People Driven – aligning the skills and perspectives of the team members to the work at hand, with broad understanding and embrace of Lean and Agile principles. Some organizations can begin their Lean/Agile journey with a low-risk, gradual People Driven approach from the start; others do not have the capability or the time and need the kick-start of a Drive People approach. Both can work, so long as the end-game is a self-sustaining, continually improving People Driven culture.

What do you think of Michael's points? Do any readers who work in software development have any opinions or experiences to share in regard to Agile software development in a Lean organization?

The Improvement "Trap"

During the past few years, I've attended many insightful presentations given by Michael Bremer while participating in conferences focused on Lean initiatives and performance improvement (most notably at the Association for Manufacturing Excellence's annual conference). Michael has currently authored a book (along with Brian McKibben) titled Escape the Improvement Trap: Five Ingredients Missing in Most Improvement Recipes. I recently met with him, and during our conversation, I asked him to explain just what is the "improvement trap" and how can companies escape it. I'm reproducing his reply here:

"For the most part, companies typically approach the business of improvement in very much the same way their competitors do. They appoint some smart person to lead the effort, and that person finds areas to improve, typically using improvement teams to attack waste and remove obvious non-value adding activities. Meanwhile, the organization conducts its business in the same manner it always has. Performance and efficiency might get better, but they get better in the competitor’s company also, so as a result, nothing much changes. That is the trap.

If an organization wants to break out of that trap, it must look for levers that can truly differentiate the organization from the competition. People laud and strive to emulate the Toyota Production (or Thinking) System (TPS). And it is indeed very powerful -- one of the best improvement methodologies of all time. But when did Toyota start to make lots of money? It was not after 20 years of TPS, although that did provide a solid foundation. Toyota started making the big dollars when they launched Lexus and redefined the customer buying experience for purchasing a luxury car. New value creation rarely gets talked about in improvement programs, yet is one of the most important areas an organization can develop."

Have you worked for a company that has invested much time and capital into an improvement initiative only to ultimately retain (or lose a bit of) the established market share? What do you think of Michael Bremer's point about the importance of new value creation?

Traditional Change Models and Lean and Six Sigma Implementation

I recently posed the question -- Do traditional change models help or hinder Lean and Six Sigma implementation? -- to Larry Solow and Brenda Fake (authors of What Works for GE May Not Work for You: Using Human Systems Dynamics to Build a Culture of Process Improvement) and I've decided to post their reply here:

"We believe the answer is 'yes!' While we are glad many Lean/Six Sigma leaders and project managers attempt to address organizational change at some level... it is not nearly enough. Change today can no longer depend on a linear six or seven step model that is easy to follow in 'the change plan' or project charter. Those models fail because linear plans fail to address the complexity of the problem itself and the larger systems in which they are embedded.

We as Lean and Six Sigma leaders owe it to ourselves, the projects, the employees, and the customers to look at business improvement change through the lens of complexity. This requires today’s successful Lean/Six Sigma professionals to understand the initial conditions for why a change is needed, and the many moving parts that are impacted by the improvement. It is not enough to analyze the problem in a vacuum. It is critical to be able to see and influence the patterns of the relationships to the business improvement, set the initial conditions, and implement improvements that can adapt to rapid and unpredictable changes in order to sustain themselves beyond the initial implementation."

Feel free to post your thoughts or comments.

Comprehensive Lean and Green Resources on the EPA Site

The U.S. Environmental Protection Agency (EPA) offers on its website a wide array of resources -- from publications and reports to case studies -- for integrating and maximizing the environmental benefits of lean. Most notably, the agency features its Shingo Prize-winning Lean Manufacturing and the Environment report from October 2003. This report was crucial in establishing the relationship between lean and the environment because it was one of the first official documents that pointed out opportunities for further enhancing organizations’ environmental performance through their lean initiatives.

In addition, the case studies illustrate examples from many different industries, but one of the important facts about many of these initiatives is that the implementation of lean concepts and tools resulted in improvements in environmental performance even when lean activities were not initiated for environmental reasons.

Has your organization experienced environmental benefits through its lean initiative? Have any readers used these EPA resources? If so, please post your thoughts.

When Lean Stalls... Why?

One of the most common problems arising on any lean transformation journey is “plateauing” – the initiative loses momentum after a flurry of important waste-reducing activities. Unfortunately, this stagnation eventually results in the erosion of most gains and the collapse of the entire implementation process. I recently posed the question, “Why do so many lean initiatives fail?” to Bob Sproull, author of the book The Ultimate Improvement Cycle: Maximizing Profits through the Integration of Lean, Six Sigma, and the Theory of Constraints. He sent me a valuable response, so I decided to post it here:

“During the years, I have analyzed failed and successful initiatives and have come to this conclusion. Continuous Improvement (CI) initiatives fail because of three primary reasons:

1. They lack focus and fail to take advantage of key leverage points that exists within all businesses.
2. The typical improvement project takes too long and fails to generate meaningful return on investment (ROI).
3. Not enough thought goes into the selection of projects.

About 10 years ago, I changed my entire approach to CI, in that I stopped trying to "Lean out" the entire enterprise and began focusing on a company's leverage points. I integrated Lean, Six Sigma and the Theory of Constraints (TOC) and I now use Throughput Accounting (TA) instead of tradition Cost Accounting (CA) to measure success.

In case you aren't familiar with TA, it uses three simple financial metrics as follows:

1. Throughput (T) - New revenue minus totally variable costs (i.e. raw materials, sales commissions, etc. or those costs that are incurred as a function of sales).
2. Inventory (I) - Money invested in things a company intends to sell.
3. Operating Expense (OE) - Money spent on turning I into T.

Both Inventory and Operating Expense have functional lower limits and when exceeded can actually debilitate an organization. Throughput, on the other hand, theoretically has no upper limit, so by constantly improving T, profits improve dramatically.

So how does this work? If you recall Goldratt’s five focusing steps:

1. Identify the system constraint.
2. Decide how to exploit the constraint.
3. Subordinate everything else to the constraint.
4. If necessary, elevate the constraint.
5. Return to step 1, but beware of inertia.

I use TOC to identify the operation that is limiting T (the constraint or leverage point) and then apply Lean and Six Sigma to only the constraint to reduce waste, improve flow and reduce variation. At the same time, I subordinate all other parts of the process to the constraint. As soon as the constraint is “broken” a new one appears immediately, so I move the improvement resources to it. The cyclic nature of this methodology assures that I am always working on the right things or those things that result in maximum ROI.

Since I began doing this, the ROI on my CI initiatives has sky rocketed and the rate of return or the time to see improvements has improved dramatically. Significant ROI improvements, when properly applied, occur in weeks versus months when compared to Lean or Six Sigma or Lean Sigma initiatives. I no longer select projects in advance -- Instead, I let the constraint tell me where to focus my improvement efforts."

The "Selling" of Lean

It appears the most common cause of lean-initiative failures is the lack of senior-leadership support and commitment. Are senior management leaders truly disbelieving the benefits of lean or are the reasons proposed by the advocates not persuasive enough? Some of the common roadblocks I’ve heard discussed are:

• Return on investment (ROI) – senior leaders do not fully see the short-term and long-term benefits of a lean initiative. Do they understand that lean is not merely a tool for quarterly or yearly gains?
• Lean is a specific “project” -- Lean improvement tasks can be delegated to particular persons within the company to fix certain areas. Do leaders fully grasp that lean is a cultural transformation not a process technique?
• Compliance not commitment – senior managers do not impede the initiative, but they do not outwardly lead it or actively participate in its implementation. If senior leadership appears reticent, does this attitude also dissuade engagement by operators and frontline staff?

What are some other reasons for senior leadership’s lack of support? Are advocates making ineffective and incorrect “sales pitches”? Please share your experiences and suggestions.