A New Way to Look at the Value Stream

(This is the third of several guest postings by Carlos Venegas, author of Flow in the Office: Implementing and Sustaining Lean Improvements. He is a principal in Straus Forest and can be reached at Carlos@StrausForest.com.)

In the previous two blog posts, I raised the question "why are people processes not reflected in some way on the Value Stream Map?" Then I presented a case in which my colleague, Ann Dorgan, and I introduced a countermeasure to that question. Now I'll share how we got at the people waste, and once we found them, what we did with them.

But first, why are people wastes important? Jeffery Liker writes about what he calls the 8th waste: "unused employee creativity" which he defines as "losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees." (This quote came from The Toyota Way, page 29.) The people wastes I'm talking about get in the way of employee creativity, engagement, and all those other things that Liker refers to. Here's a partial list of people wastes:

Lack of:
· Employee influence over the processes they use
· Job-related training
· Follow-through or feedback
Unclear:
· Vision, mission, goals, and strategy
· Responsibilities and authority
· Rewards and consequences
Also:
· Competition (within the organization)
· Uninformed or misinformed employees
· Mishandled conflict
· Ineffective communication
· Ineffective meetings
· Turnover
· Schedule slips

So, how did find these people wastes in the value stream? We asked the team to identify places in the process where people wastes showed up. These became opportunities for improvement, just like process improvement opportunities. The team then illustrated the future state with the people wastes removed. Finally, the identified countermeasures to resolve the people waste, and put them into the implementation plan.

The tricky part in all this is to not let the conversation devolve into emotional complaining and bickering or, worse, become personal (which can happen even when discussing process breakdowns). First, we told the team we were not interested in names, only the types of people waste that they identify. Second, we reminded the team that people wastes point to process and perhaps training issues. And that's exactly how we use the human dimension--as pointers to process and training issues that require process and training solutions.

We actually videotaped the value-stream mapping workshop where we introduced the concept of people wastes. We'll probably put some of it up on YouTube next year. If you want to get an alert when that happens, go to http://www.strausforest.com/ and get on the list.

In the mean time, Ann and I are interested in your feedback and thoughts.

How to Eliminate People Waste

(This is the second of several guest postings by Carlos Venegas, author of Flow in the Office: Implementing and Sustaining Lean Improvements. He is a principal in Straus Forest and can be reached at Carlos@StrausForest.com.)

Recently my colleague and I facilitated a Value-stream Mapping (VSM) workshop with a new client. This one was like most I've done before, with the same kinds of challenges: clarity over goals and scope; mid-workshop angst over progress; and end-of-workshop elation over the results--or at least the potential results as illustrated by the future-state map.

Here's the deal with VSM—it’s a powerful tool because it shows the whole system--the process from supplier to customer. It helps us see visually what's working and what's not and where to go.

But something is missing. Granted, the VSM is high-level, so you don’t expect to see everything. (If you want to see everything, go to the gemba!) Anyway, when we document and analyze a process, we're leaving out an important and obvious dimension—the human dimension. People.

Some of us have a sense that this human dimension is important in process analysis. But the trick is--what do you do with the human dimension once you've identified it, or even how do you identify it in the first place?

My colleague, Ann Dorgan, and I put developed a way to put that dimension—people—on the map.

Here's an overview of how we did it in the context of a real case study. The facts were these:

Our client is a retail organization with 17 stores, 1300 employees, and annual sales of over US$40 million. They had conducted kaizens in most of the 17 facilities successfully. By successfully, I mean that they met their targets (mostly), they sustained their changes (mostly), and the participants were enthusiastic and sincere.

Ann and I think they’ve been successful thus far in part because the executive team is a model of support. The CEO understands what process improvement is about, and he, along with his executive team, attend the kaizen workshop report-outs. Plus, the director of process improvement is talented and enthusiastic (as many Lean professionals are).

When we met the process improvement director, he was ready to take the next step: learn how to use the value-stream mapping process to coordinate their Lean implementation.

We contracted with the client to VSM their purchasing and accounts payable processes. Since this was their first Lean office event, they didn't have much process data. That made setting specific, measurable goals difficult. We ended up setting real simple goals: create a current- and future-state map, and an implementation plan. Lack of specific, measurable goals in this case was OK. It's not unusual for a client not to have data—or at least the right kind of data—the first time they do a process.

We took the P.I. director and a cross-functional team through the VSM workshop. We used a process inspired by the classic VSM process (see Learning to See by Rother and Shook), with modifications to accommodate the realities of office vs. factory.

The big difference was that we added that “new” dimension: people waste. We asked the team to (1) document people waste on the current state map; (2) replace people waste with productive behaviors on the future state map; and (3) create plans to achieve the future-state behaviors for the implementation plan.

Here's an example of people waste that surfaced at the workshop: unproductive conflict. In their current state, they identified angry emails that had been exchanged between store managers and accounts payable.

When the team created its future-state map and implementation plan, they replaced angry emails—a waste of people’s energy and time—with a process solution that included communications and email etiquette training. Obviously part of the solution in this case was to fix a broken process. Another important part of the solution—and this is where the human element comes in—was to provide the communications training.

My colleague, Ann Dorgan, and I were pleasantly surprised by both the response and the results of “putting people on the map.” The team expressed appreciation for addressing the human factors--people waste. Plus, the training that they will be receiving will be targeted and based on a process need. More training should be like that.

So, specifically, how do you get at the people waste? And once you find it, what do you do with it? I’ll answers those questions on the next blog post.

Putting People on the Value Stream Map

(This is the first of several guest postings by Carlos Venegas, author of Flow in the Office: Implementing and Sustaining Lean Improvements. He is a principal in Straus Forest and can be reached at Carlos@StrausForest.com.)

I remember hearing an old interview of Julia Child--the famous chef and author. The interviewer asked her if she ever modified a recipe that she was cooking for the first time. Her answer surprised me. She said that she never modified the recipe the first time she cooked it; if she did, she would not be able to tell if it was a good recipe.

That interview came back to me when I first began learning about implementing lean. I carefully followed my sensei's instructions. I did things "by the book." That experience taught me this: Lean is an excellent recipe for not just process improvement, but for employee involvement and morale, too.

Some time ago, I began bringing Lean into the office environment. At that time the question was, "will Lean work in the office environment?" Time and experience has taught us that the short answer to that question is a resounding "Yes, but…."

First the "yes" part. Yes, the principles and tools of lean can be applied in the office. Lean is, among other things, well suited for process improvement. Offices have processes, therefore lean can work in offices.

Now the "but…" part. The language of the factory does not always translate into the language of the office. I ran into that complication when I wrote Flow in the Office: Implementing and Sustaining Lean Improvements. Here's an example:

When I was a lean neophyte, I went on a learning pilgrimage to Japan. On a tour through a factory in Japan, a sensei told me there are seven flows: people, information, raw materials, work-in-progress, completed products, engineering, and tooling. Those flows make obvious sense in a factory environment, but not so much in an office environment. Sure, it makes sense when you look at the flow of paperwork and people, but what about the flow of ideas, decisions, influence, or electrons--things that are not so visible--or even invisible? That's the office environment where the language of the factory does not make sense. Yet, we know that flow still exists in office processes.

My challenge was to articulate my experience in a new language. Hence, the book Flow in the Office.

Since completing the book, I've taken on a new challenge: if people are such an important part of a business process, why are people processes not reflected in some way on the value stream map?

My colleague, Ann Dorgan, and I have come up with one answer to that question. We led a client in value stream mapping their purchasing and accounts payable process. In my next two posts, I'll show you how we "put people on their map."

Norway is a Lean Leader? Who Knew?

One of the global leaders in getting new products to market quickly is… Norway.

Norway?

Yes, according to a new study by the Center for Global Innovation at the USC Marshall School of Business.

According to Industry Week, the Center found that Japan and Norway both introduce products faster than the United States. I would expect Japan to be in that position, but Norway took me by surprise. What do they make in Norway?

By the way, before anyone starts nitpicking about my headline on this posting, no, the study did not actually talk about lean, just time to market. So yes, maybe my headline is stretching things a bit.

How did the two professors who conducted the study – Gerard Tellis and Deepa Chandrasekaran – come to their conclusions? The Industry Week article says the study is “based on 430 product categories over 50 years in 31 nations.” It doesn’t say exactly how time to market was measured.

That makes me wonder. Fifty years is an awfully long time, and I don’t know how, if at all, the study takes into account improvements that might have occurred during that time in the processes by which products are brought to market.

Also, there is only so far you can go in drawing conclusions about entire countries. Companies, not countries, bring products to market. The findings may lead to some insights about how national cultures affect business cultures and operations, I suppose.

Still, I find this interesting. There was also one other interesting, if not too surprising, finding:

The study also concludes that time-to-takeoff of new products varies greatly between products considered "fun," such as cell phones, with a distinctly shorter takeoff than those products equated with work, including clothes dryers.

What does it all mean?

The report could help companies develop strategies for launching new products. "Managers are facing an intensely competitive market, characterized by increasing globalization, more frequent new product launches, and shorter life cycles," Tellis says. "In such markets, they need to know which nations are most innovative, where to launch new products, and whether to do so with a sprinkler (simultaneous across nations) or waterfall (stagger across nations) strategy."

Perhaps. Any insights that can help a company be more competitive are useful.

And maybe you can find those insights in Norway.

Gasoline Refiners Have Trouble Listening and Thinking

I’m a little mystified by the way gasoline producers approach issues of supply and demand.

A key lean principle is to produce what the customer wants and – ideally – exactly the amount the customer wants. No more, no less.

But production of gasoline seems to be based primarily on the price producers can get, not necessarily on how much the consumer wants. In addition, the decisions some companies are currently making about production don’t seem entirely rational.

A recent posting in the Environmental Capital blog of The Wall Street Journal notes that both oil and gas prices have fallen sharply. But the cost of turning crude oil into gasoline remains high. The result:

Turning crude oil into gasoline is now a money-losing business. A barrel of refined gasoline is worth $2.84 less than a barrel of oil, Reuters reports; earlier this year, gasoline fetched a hefty premium of more than $30 a barrel.

As a result, some refiners, including Sunoco, have cut back production. But not all.

What’s surprising is that U.S. refineries are still producing so much despite the dismal economics. Though U.S. gasoline production slipped last week, refiners still produced more gasoline in mid-October than they did at the same time in 2007, even though demand for gasoline has dropped dramatically in recent months. The outlook for 2009, with a recession looming, isn’t any brighter.

There seems to be a real disconnect between what refiners think should be produced and consumer demand. That shows an absence of lean thinking on the part of the refiners, who should be focusing on what (and how much) the customer wants.

There is also an absence of lean thinking on the part of Keith Johnson, who wrote the blog post. He says:

Given gasoline’s poor returns right now, refiners have a couple of options—and neither one would be good for American drivers recovering from record-high gasoline prices. They can take capacity off-line, as Sunoco is doing, in the hopes that “standing on the hose” will keep gas prices steady. Or they can try to re-jig refinery output to focus on products that offer better returns, such as diesel or jet fuel.

He left out the third, lean option: Improve the processes by which gasoline is produced to lower the cost of those processes, so it is still possible to make a profit (or at least lose less money) selling gasoline at lower prices.

Maybe the recent drop in consumer demand for gasoline will serve as a wake-up call for the refiners. We can hope.

Healthcare Association Head Needs to Learn About Lean

The president of the Blue Cross Blue Shield Association seems to understand the need to eliminate waste from healthcare. Unfortunately, he doesn’t have a good handle on what needs to be done.

The New York Times just published an interview with Scott Serota, the association’s president and chief executive. One of the issues he discussed was the need to eliminate waste.

Our goal is that health care costs rise no faster than any other goods and services. The essential fundamental to getting there is improving the underlying system because 30 percent of care rendered today, according to some studies, is unnecessary, redundant and, in some cases, even harmful. We need to get waste out of the system. That means $700 billion in a $2.4 trillion system.

I’m talking about a whole battery of things like duplicative testing such as two M.R.I.s instead of one or hospital-acquired infections.

That certainly sounds like (and is) an opportunity to apply lean principles. Or six sigma. Or other improvement methodologies where it has been proven over many years that they work.

But Serota apparently is not aware of all that:

The cornerstone of how we get at this is creating a comparative effectiveness institute to study what treatments really work best for a given condition — and letting everyone know what works. There is legislation on this pending in Congress.

Just what we need – a new bureaucracy to conduct a study to tell us what we already know.

I also take issue with Serota when he talks about the decision by Medicare and some insurance companies (including some of the blues) to stop paying for treatment of avoidable medical mistakes, known as “never events.”

On the one hand Serota acknowledges the impact these decisions have:

If they are no longer getting reimbursed for those costs, institutions will be very aggressive in eliminating those events.

That’s the point, isn’t it? But then Serota questions the approach:

Not paying for them is the end point… We’re trying to figure out mechanisms to help them improve their performance. Then we’ll tie reimbursement to performance. These events are a huge problem where we haven’t made a lot of progress over the last 10 years. We have to fix it, then adjust the financing.

It sounds like he’s saying we should stop paying for mistakes after we stop making them, or at least after we know how to prevent them. I guess no one ever taught him the value of a “burning platform.”

With any luck, the drive for the “comparative effectiveness institute” Serota mentions will be abandoned amid growing awareness that some healthcare institutions have already found approaches that work, such as lean. However, I’m not too optimistic about that. Drives for new bureaucracies sometimes take on a life of their own, regardless of the facts.

Mistake-Proofing Cell Phones for Drivers

Sometimes the lean tool of mistake-proofing prevents people from doing something stupid. And sometimes people do stupid things while driving.

I wrote recently about how Ford is creating a car key that can be programmed to prevent the car from going above a certain speed. It is being marketed to parents whose children have reached driving age and may be inclined to drive too fast. The key can also prevent the radio from being played too loud and encourage the use of seat belts.

Another stupid thing young people – and old people – do is talk on their cell phones while driving. Many states have passed laws banning the practice unless the phone is hands-free (although studies have shown hands-free phones may not help because the driver is still distracted by the conversation).

But a law is not mistake-proofing. Mistake-proofing is when you make it impossible for a person to make a mistake (i.e., do something stupid).

I would have thought it was impossible to mistake-proof talking on a cell phone while driving. But a CNN article made me realize that I underestimated what technology can do.

Aegis Mobility, a Canadian software company, has developed software called DriveAssistT that will detect whether a cell phone is moving at car speeds. When that happens, the software will alert the cellular network, telling it to hold calls and text messages until the drive is over.

The software doesn't completely block incoming calls. Callers will hear a message saying the person they're calling appears to be driving. They can hit a button to leave an emergency voice mail, which is put through immediately…

Aegis' software will work on phones with Windows Mobile software, popular for "smart" phones, or Symbian software, used in phones from Nokia and Sony Ericsson. It uses the phone's Global Positioning System chip to detect motion, aided by the cell-tower signal. If the phone has a Wi-Fi antenna, that can be used as well, said Dave Hattey, Aegis' CEO.

To work, the software has to be supported by the cellular carrier. Aegis has no deals in place yet, but is in discussions with the big U.S. networks, said Teater, who is a vice president at Aegis. The company hopes to be able to announce early next year that the software is available through a carrier, probably for $10 to $20 per month for a family.

The software can be managed remotely through a Web site. For instance, parents will get alerts if their kids override the motion-sensing feature to indicate that they're riding in car rather than driving. A corporation that buys the software for their employees can do the same.

What will they think of next?

Green Initiatives Present New Challenges

The biggest challenges for companies trying to become green include figuring out how to measure what they do, and integrating lean initiatives with other forms of improvement.

Adam Zak, head of Adam Zak Executive Search, offered those thoughts when I spoke with him recently.

Adam’s experience is in recruiting people to fill lean jobs, not in overseeing environmental initiatives. But he knows a lot about how companies are run – and he sees what is happening today.

“Lean and green are becoming intimately intertwined, although most companies haven’t figured out that by doing lean they are achieving green objectives – because they haven’t figured out how to measure green,” he says. “What people are struggling with is, what do you measure and how do you measure green, and how do you define that?”

Equally important, if not more so, Adam believes, is the way different efforts are disconnected.

He comments, “What I’m seeing, and it’s just the tip of the iceberg, is that people are trying to figure out how to meet what used be variety of objectives. They are telling me they are doing green over here, lean over here, and there is a third silo, product innovation or R&D. They are all using language that is similar and should be connected.”

Growing numbers of companies have a person with the title of CSO – Chief Sustainability Officer. But Adam argues that “We should be creating a new breed of CSO who has his fingers or hands on the levers of the lean activity, the innovation active, and the green activity.”

Do you agree? What is your company’s experience with pursuing green initiatives? Post your comments below.

Lean Jobs: The Market May Be Slowing Down

Because of the financial crisis, there may be fewer lean jobs available in the near future – and the jobs that are available may require a broader range of skills.

Also, anyone considering changing jobs should look carefully before they leap.

Those are the views of Adam Zak, head of Adam Zak Executive Search, a company that specializes in filling lean jobs.

I’ve written in the past about my conversations with Adam, but we hadn’t spoken in some time – not since well before the current crisis.

Right now, Adam says, he has his hands full with plenty of searches. But he sees signs that the overall job market may be slowing down.

“We’re hearing people talking about deferring or delaying,” he said. “There’s just so much uncertainty. People that were planning on hiring in the 4^th quarter for the 1^st quarter – everything’s up in the air across the board. I can’t read the tea leaves yet. I’m getting very mixed signals.”

In addition, he said, more companies are “looking for people who can wear more than one hat. Now they’re saying what they really need is a person to do the operational role and also wear the lean hat. They can’t justify the additional headcount.”

Also, “I don’t have evidence, but I have some stories, that in the $85,000 to $125,000 range, there is going to be a dramatic decrease in the number of people brought on board,” he commented. (Adam’s firm generally handles searches only for positions of $150,000 or higher.)

Adam believes that companies today have a better understanding of lean. “More and more companies are understanding that lean isn’t just about tools. It’s about mindset, about engagement, it’s about business growth. Lean is not about stuff, it’s about truly improving our business. Even at more junior levels, people need to focus not just on ‘what am I doing on the shop floor,’ but ‘how is it affecting our business, our strategy, our customers.’ It’s not about being a technician as much as it once was. It’s about what are we doing through lean to drive our business.”

Every crisis contains some opportunities. For employers, Adam advises, “In times where there is a difficulty in the marketplace, if you in your business can make a projection that says you are going to successful, now is a great time to recruit people from your competitors, who may not be as strong as you. (Candidates) might consider making a switch if you are the stronger player. It’s a great time to build bench strength and recruit stars.”

However, he urges job-seekers to proceed with caution. ” For people making a job change, I would always suggest, but especially in times like this, that you not jump away from something, but look to be attracted something. Just because your company doesn’t have brightest prospects doesn’t mean its time to bail. You have to look at what a new potential employer can offer you that’s better. Make a move that’s good from a career perspective. Due diligence is just as important, if not more important, in this economic scenario.”

Adam also had some interesting thoughts regarding the growing focus on both lean and green (environmental) issues. I’ll discuss those in my next posting.

Mistakes on Specimen Bottles Prompt a Lean Study

Radio-frequency identification (RFID) tags on specimen bottles can help reduce errors in biopsy analysis, according to a new study by the Mayo Clinic.

That may sound like a fairly narrow, clinical issue, but I suspect it is bigger than that. And the study contains some intriguing suggestions of a lean approach.

The study, reported by The Washington Post, notes that the clinic’s Gastroenterology and Colorectal Surgery outpatient endoscopy unit (how’s that for a name) sends out more than 30,000 specimen bottles a year for pathologic reviews. And that is just one clinic.

How often do errors occur? The article says the study found 765 errors out of 8,231 specimen bottles (that’s 9.3 percent), with the errors consisting primarily of either the wrong patient label or no label being affixed to a specimen bottle.

But the rate dropped to 47 errors out of 8,539 bottles (0.6 percent) after a quality improvement initiative.

And from a lean standpoint, that is the interesting part. Use of technology like RFID tags is not in itself lean. But the decision to recommend the tags stemmed from a focus in the initiative on “correct data creation and transcription point reduction,” according to a news release. That sure sounds like an effort to find and attack the root cause of the problem – which does sound lean.

The Post article doesn’t discuss the consequences of errors on specimen bottles. I imagine these could range from a test having to be re-done to a patient being treated incorrectly.

I have a little concern about the recommendation. I suspect a lot of hospitals will be reluctant to spend money on new technology like RFID. And I can’t help but wonder whether there is a simpler (leaner?) and less costly solution.

However, I’m glad the Mayo Clinic conducted this kind of study, and I hope they do more in the future. I also hope the people there do think in lean ways.