Lean

Demand Surges for Lean Talent over Six Sigma

Industry Week

Jill Jusko
Feb. 14, 2012

Lean talent demand exceeds Six Sigma by almost 68% in the current study, almost double the 35% edge it held last year.
Demand for lean talent over Six Sigma talent has accelerated at its fastest year-over-year pace in the study's history, according to Avery Point Group. 

Why has a desire for lean talent overtaken that for Six Sigma? Noble suggests that companies may be seeking a "more practical way" to get results with fewer resources -- and to get those results more immediately. For some, Six Sigma carries a stigma of "paralysis analysis," with results considered a more long-term endeavor, he says. 
  
Full article here:
 http://www.industryweek.com/articles/demand_surges_for_lean_talent_over_six_sigma_26615.aspx?Page=1&SectionID=2

What HR needs to know about recruiting Lean Talent

Some summary points from an article posted at www.PeopleOrchard.ca:

When recruiting lean talent:

You are looking for someone with preferably NO INDUSTRY EXPERIENCE
o       They bring value by not understanding it through the ‘stupid’ questions they ask, which those familiar with the process would never ask, helping them to understand it. 
o       This gets those with industry experience to see things differently – helping THEM break down and rebuild the process.

There currently is no standard to determine lean training/certification. 
o       There is no green belt or black belt – it is not related to six sigma – but many consultants use this framework, adding to the confusion
o       There is no greater ‘certification’ than true experience and results as a measure of qualification.

Skills you are looking for:
-          Coaching, patience, questioning, problem solving, interpersonal skills, communication & facilitation skills, leadership,
-          Someone who is interested in working with people to learn how lean will apply to your unique situation, because you are different; NOT someone who tells you how it applies
-          Someone who has NO experience in your industry

Yes, a lot of it is counter intuitive at first.  Keep learning click here

A language they don’t understand: Lean in Spanish

Did you learn about Lean in Japanese? Why are we teaching it in Spanish?

 

Is making a translation sheet for terms rework or over processing? What about using it? Could we be more effective?

 

We had this feedback during process improvement work at a hospital with a clinician who previously completed her PhD on Jargon being a Power Differential.

 

Regarding our use of Spanish terms instead of English to teach lean concepts, she said whenever we use a foreign language:

 

- “it alienates people because you’re speaking a language they don’t understand.”

- “We do this in health care; it’s like we have a culture [the medical culture where we have our own language]”

- “we are not communicating in a language to understand [for end users like patients]”

- “It’s a culture we [medical professionals] all understand, and that myself {medical professionals] maintaining my own culture is more important than ensuring communication actually occurs.”

- “Speaking in another language unintentionally excludes those who don’t understand it.”

 

Does this promote resistance?

 

Are you focused on the end user of your communication if teaching something in a language they don’t understand?

 

What’s the feed back from your learner on language preference?

 

Examples of Spanish we use to reference lean:

Muda - waste

Kaizen - continuous improvement

Poka-yoke - mistake proofing

Heijunka - leveling

Jidoka - human autonomation (independence)

Sensei - teacher

Gemba - workplace

Hoshin Kanri - strategy deployment

 

We already use English for 5S;

Should we start using more Spanish terms? Why not?

There is an English translation for each Spanish term.

 

As continuous improvement leaders we set an example – and look for areas we can self improve; should we use the same language as those we’re talking to?

 

If during this article you thought “Why are they using Spanish?” -that’s how you audience feels when you use Japanese.

 

We welcome feed back on this – in a language we understand.

Interview preceding AME International Lean Conference, Baltimore, 2010

Leading the Lean Enterprise Transformation Leading the Lean Enterprise Transformation


George Koenigsaecker is a principal investor in several Lean enterprises. He is a Board Member of the Shingo Prize, The Association of Manufacturing Excellence, The Thedacare Center for Healthcare Value, Ariens Outdoor Power Equipment, Baird Capital Partners, Simpler Consulting and Watlow Electric Corporation. From 1992-1999, he led the Lean conversion of the HON Company, a $1.5 billion office furniture manufacturer, his efforts led a tripling of volume and culminated in HON Industries being named by IndustryWeek magazine as one of the "World's Best Managed Companies". 

Prior to this, George was with the Danaher Corporation, where he was President of the Jacob's Vehicle Equipment Company (whose Lean conversion is featured in the book, Lean Thinking by Jim Womack and Dan Jones) and Group President of the Tool Group, then the largest business unit of Danaher. He also developed and implemented the "Danaher Business System", a comprehensive Lean enterprise model. He has held senior management positions in Finance, Marketing and Operations with Rockwell International and Deere & Company. He is a graduate of the Harvard Business School.

Interview preceding AME International Lean Conference, Baltimore, 2010

Q You’ve lead lean companies through a lean transformation. You’re currently advising companies. What was one of the most successful lean transformations you’re proud of?

A We established the original form of the Danaher business system, which is modelled on the Toyota business system. I think the encouraging thing is that if you look at public, stock that you could have purchased from 1987 on, when we started the original transformation at Jake Brake, it has been the highest performing public market stock per, articles in the USA Today and so on. So it has been able to take lean lessons and apply them and get financial performance from them. It’s also the expert in the transformation journey. They’ve grown from a few hundred million dollar business to 12-billion dollars and continuing to grow today. And they do it by acquiring companies and transforming them to lean.

Q What is one element at Danaher that you think was present at the beginning and continues to drive the business?

A One is that Danaher and others that have been successful at the lean journey recognize that you have to change senior leadership behaviour. To do that you’ve got to get your CEO and direct reports to think differently about how they do their work. And companies that are very successful at this, pretty much have a required executive immersion program of some sort.

Q What would you say to some of the many middle management folks who are quite committed to lean and looking to engage their leadership on the question of lean and back up the work that they’re doing to spread it throughout a company? When do leaders start to really realize the benefits of this model?

A Well, there’s probably three things to think about as a middle manager that’s trying to get this moving.
One of those is to make sure that whatever work you’re doing with lean drives results on a fairly quite basis. Toyota talks about the True North metrics, which are really four things in hierarchy of importance that you should be measuring on whatever work you’re doing. So maybe you’re in charge of a subsection of a value stream and you can start to work there. The four True North areas would be to look for double-digit, which is 10 to 30 percent sort of number, annual improvement in these four metrics. 

One is human development, which might be measured as safety or number of problems solved per person — those kinds of things. The second one is quality, which is both internal quality and external quality. The third one is flow time or lead-time, which is principally looking at all of your customer- or client-facing processes and seeing how responsive they are, as well as, then to make that become responsive, you’ve got to change your internal flows. And then the fourth one is cost or productivity. 

And those are in a hierarchy, but there is an expectation that you should improve each of them at 10 to 30 percent per year — forever is the basic vision. So you pick a spot and you’ve got some area under your responsibility, think about those kinds of metrics for your area, think about improvement events to begin to generate that kind of performance and realize that the tools, properly applied, should always generate, worst case, 120-day payback. This isn’t something that you should look back a year later and say, well, we invested this but it isn’t there yet. You should be able to look at it after a quarter and see that you’re on-path to generating enough improvement through the productivity gains and that sort of thing to pay for the process in total itself. So, have the discipline to generate results. We used to use a phrase — We would buy our freedom — and by that we meant we would generate enough results to get the freedom to continue the process.

Another aspect to think about is that groups of people, and let’s talk about if you’re a middle manager, your leadership team, they will form sort of a normal distribution curve in terms of attitude towards change. And you’re going to have one person that will probably be very willing to try it, you’ll have another person that probably never will try it in your lifetime, and then you’ll have a group of people that sort of run a range in between that. 

So as a middle manager try to identify the individual on the senior management team that is at that sort of far right of the curve. In this case, is most likely to look at something like this and see the good in it, and try to just work with them to get them involved, to get them to get some learning, get them to give you some support. And then if you get to the point where you feel like things are going fairly well there, then try to figure out, if there’s ten people in the top management group, who’s the second most change-oriented person and try to use that first person to help change the second one.

Q What’s at the heart of True North metrics that makes it successful in terms of measuring and then becoming a catalyst for change?

A One of the fundamental aspects of the power of True North metrics is that what they really measure when you take all four of them is all of the dimensions of improvement that you can measure. If you improve your people’s problem-solving capability, the human development metric. If you improve everything you do, both your work processes and your outcomes. If you improve by shortening the flow times of all of the work you do and improve your responsiveness and improve your productivity and cost, you’ll find that actually any kind of improvement you can think of is going to fall into one of those four categories. 

If you improve in all the dimensions that you can improve, every line item on your income statement and your balance sheet, everything you can measure financially or operationally will move in a good direction. If you have higher quality, you do it with shorter lead-times, you do it with lower costs, you do it with a more involved workforce. In a sense, you keep that moving, no one will ever be able to capture you. And if you go through an income statement, you’ll have higher revenue because you’ll have higher quality and shorter lead-time and faster product development. You’ll have lower cost at production because of productivity gains. So higher revenue, lower costs works good on an income statement. 

You get to the balance sheet and if you’re a manufacturing company, you’ll have lower inventory levels because of flow. You’ll have lower capital equipment because of better utilization through things like TPM and SMIT, and eventually redesigning capital equipment to fit with a lean environment. So on your balance sheet side, you’ll have less of the working capital, you’ll have less of the fixed capital, and often, as you generate more money, you’ll end up with less debt, so you may have less debt on your balance sheet.

Q What do you think is the future for companies as the challenges in the global marketplace increase? Do we have a choice but to follow True North or lean or the fundamental philosophies that underlie these new management processes?

A Basically, my experience is the first company in an industry that adopts these successfully, which is a small group because most people are unsuccessful, but the first organization that successfully adopted improves fast enough that no one can catch them and eventually becomes the dominant player in their industry.
And so I think if you take a long perspective that’s the likely evolution — that you’ll have to do it because the pressure from someone else that does it, in terms of their competitiveness, will eventually push you to do it. Having said that, there are relatively few organizations that have been focused enough at the senior leadership level to really get it built into the culture so that they keep it moving.

Q It has become certainly easier to make the case for lean. One of my recent interviewees said it’s not a question anymore. What’s next for lean thinking as we look to sustain companies for years on the lean journey and in the face of changing economic circumstances?
 
A I think the "what’s next?" is always kind of interesting because when I first started this, it was thought to be something that came out of automotive and probably only worked in automotive.
And then we applied it to a much lower unit volume company at Jake Brake, and people thought it wouldn’t work there because the unit volumes were so much less. And then it got applied to things like Pratt & Whitney, which was in the neighbourhood of Jake Brake, applying it to very low unit volume stuff.
Then we started applying it to administrative work and were able to show that, Gee, it works the same on administrative processes as it does on production processes. And then we began to branch out from applying it to manufacturing organizations to applying it to non-manufacturing organizations, for instance healthcare. What we have been able to demonstrate over the last 30 years is that lean is something that works on any kind of work. And it doesn’t matter what your work is, whether it’s education or healthcare or manufacturing or operating an aircraft carrier, lean will work there. You may have to struggle if you’re the first one to ever apply it, to figure out how you actually take these tools and principles and apply them to your work, but it will, in fact, work there. 

So I think at one level, we’ve demonstrated the universal applicability of lean tools and principles to improving any kind of work. So that may be the accomplishment in the last 30 years.
The failure has been that its actual spread at a deep level has been very limited and that we still have to get much more serious, in my view, about senior leadership education and then building cultures that sustain it through generations. 

So, I think the big picture for the future is getting much more definitive about what does it take to build a successful lean culture that can live through, for instance, multiple CEO transitions and continue on the journey. And to get back to the beginning, that is the part that I feel good about. I don’t feel like we had a perfect model of doing this but of the 12 companies and the two manufacturing companies on whose boards I’ve been on, all 14 of those organizations continue on the journey, some as long as 23 years ago. But in the future of lean that is the key — figuring out how to build sustainable cultures so that the improvement pace continues through generations.

Q Do you think that lean in healthcare, lean in manufacturing, lean elsewhere is going to start to be the dividing line between those who survive and those who don’t?

A Ultimately, I think it absolutely will. I think we’re still in the phase where leaders that think they want to go on the path haven’t really been given a very good description of what are the key things that have to be done to be successful on the path. 

So, too often it has been treated like a program and hasn’t led to ultimate success. It is a system that takes a lot of hard work because you have to restudy every process, let’s say five times over a ten-year period as you begin to use that as a way to generate results and build the culture. It’s something that requires senior leaders to have the humility to admit they don’t already know everything about this subject and go back and do some personal learning. 

It’s a system that doesn’t allow them to hire someone and delegate it to them because in the end they still won’t know what they’re doing and whether they’re doing the right thing. If you’re going to do something that is fundamentally a significant culture change, that’s going to have to be led by the chief executive officer or it isn’t going to happen. It can’t be led by someone lower level that you delegate it to. So there’s a lot of ground to cover yet, in terms of making this a broad base success.

Q Are you looking forward to coming to the AME conference?

A Yes, I always do. It’s always been a place that brings together a lot of people who are thinking about and working hard on improvements. And it’s always the case that you need to separate the wheat from the chaff as they say in agricultural areas. But you always find that there are individuals and organizations that have done very good things and that you can take away true nuggets of improvement ideas. 

And a rule of thumb, you can go to a conference and come away with a couple of things that you can actually apply and make improvements, than you’ve done well at the conference. If it’s more than a couple, then it’s really impressive. The key question is, Are you going to go back and have the discipline to think about, I’ve got this and how am I really going to apply it and make something happen with it? How am I going to change the results of our organization for the better with what I learned at the conference? But the conference always brings enough lean leaders together that there’s plenty to learn and more than enough that you can take home and can apply it between one year and the next.

Perseverance Will Pay Off

Publish date: September 2008
Superfactory
www.superfactory.com
By John M Rubio and
George Koenigsaecker
Leading the Lean Enterprise TransformationLeading the Lean Enterprise Transformation





Companies that have made a real commitment to lean have the tools and systems to survive and prosper in a down economy. Is your organization equipped to respond and take action as soon as your leading indicators start to turn?

Gasoline is over $4 per gallon in many parts of the country. Food costs are higher than they have been since 1990, with more price increases expected through the end of the year. April foreclosures jumped 65% compared to the same month in 2007, a trend that analysts expect to continue for the next several years. It’s obvious now that the United States is in a cyclical downturn that’s being exacerbated by problems in the financial systems and credit markets.

Manufacturing company leaders cannot wait for the economists to officially declare a recession, as defined by two or more consecutive quarters of negative GDP growth. With the exception of Petroleum companies in high-growth global markets and a few other industry sectors no one is going to be able to “wait out” this downturn without any trickle-down effect on their business. Now
is the time for business managers to assess the direction of their lean efforts and respond to recessionary pressures. If they wait until it is painfully obvious that they have to make changes, company performance will inevitably follow the sales line down and struggle throughout the recession.

Watlow Electric Manufacturing Company (St. Louis, www.watlow.com) did not respond quickly enough to the last recession in the beginning of the decade and company leaders learned their lesson. This time around, even though their incoming order rate is only just starting to slow, the company has already taken significant steps to reduce costs, cut lead times and lower inventory
levels. Watlow has been successful at reducing lead times which has significantly impacted their growth cycle and netted new business. Lean is clearly taking on the view as a growth strategy.

Leading Lean Indicators

Toyota’s four “true north” metrics center around
1) human development,
2) quality,
3) lead time and cycle time (delivery), and
4) cost and productivity.

As organizations progress through a lean transformation, in good economic times and more difficult times, they should strive to achieve double-digit improvements (at least 10%) in each of these four dimensions. Managers must also
identify one area for a significantly greater rate of improvement. Which one will depend on the immediate customer needs and the business situation. This breakthrough area will have the most potential to have significant impact on customers and other stakeholders in the near future.

As a word of caution, the key metrics that managers let slide are always the ones that lead to serious problems in a couple of years. Witness the quality problems that manufacturers have had recently with lead paint on toys and food contaminants. Every improvement initiative should at least have safety and quality gains as “tag along” goals, even if the primary focus is on cost and
productivity. The four true north metrics are all related, improving one supports gains in the others.

Following traditional cost-cutting methods, when sales begin to slide most executives will evaluate each line item on the budget and cut those that don’t seem to have an immediate impact on the business. Training programs and continuous improvement efforts are typically the first to go.

It’s not easy for company leaders to see the immediate impact of such cuts on the business. To help bring such factors into account we developed the Simpler Business System, which incorporates Toyota’s true north metrics as well as the pillars of the Toyota Production System (TPS). The model has evolved over the past 20 years based on experiences with successful lean implementations during times of growth and times of market contraction. This enterprise business model consists of three elements: people, process, and purpose (See Figure 1).

As indicated in the figure below, in best practice and recession-proof companies’ people are personally involved and dedicated to specific value streams. They have been properly oriented
and trained, and are continuously informed of changes in the organization and the market. Most employees want to make a personal contribution to the success of the organization. By giving them the time and resources to participate in continuous improvement activities, for example, managers are demonstrating their respect for their knowledge and giving them the tools they need to reduce waste and variability that most company leaders never see.

If they truly regard employees as their most valuable asset, then leaders must invest as much in employee development as they do in any hard assets. Such investments typically deliver a 10:1 return or better, which is far above other investments. This is as true in boom times as it is during
a recession.
The key to successfully investing in people is that such investments should always link back to the strategic purposes of the organization. Strategy and policy deployment processes can provide a clear connection for employee development activities to the company goals.

Integrate continuous improvement tools and employee development to provide a clear line of sight to the organization’s core strategy.

Quality is improved by solving many small problems that build on one another over time.

Organizations should not focus on any one quality improvement tool but on the appropriate tools for each specific problem. Too many company managers embrace popular programs, like Six Sigma, ignoring waste reduction and other variability reduction methods that can also provide huge improvements. Within a targeted area, a blended application of tools will have a much greater impact than focusing on a few select projects.

During most engagements we look for 15-25 safety and quality improvements during a week-long Kaizen or rapid improvement event. These may be relatively small improvements, but they keep everyone focused on the true north metrics while we target breakthrough gains in other areas.
Such improvements typically impact values streams vertically and horizontally, leading to financial improvements along multiple dimensions.

Unfortunately, quality gains can take a long time for customers to notice, and even longer for customers to believe that they will be sustained. In fact, it might take up to three or four years for
a company to reap the full market benefit of any quality gains. Even though managers cannot count on such improvements to pull them through a recession they still need to keep grinding them out.

The Biggest Bang for Customers

While it takes some time for customers to recognize quality improvements, they will notice reductions in lead times and delivery times very quickly. If an organization consistently cuts its
lead time relative to the competition by 75%, it has the potential to grow at three to four times the industry growth rate. That is, if the industry or sector usually grows 3% per year, the company could grow 6-12% per year if it can reduce lead times and hold them consistently.

Kolbe and Kolbe Millwork Company, Inc. (Wausau, Wis.) has achieved record sales in the midst of a construction downturn. Its high-end wood and vinyl windows and doors have found a recession-proof niche bolstered by their embrace of a lean business system.

In 2005 Kolbe and Kolbe managers began incorporating lean into its manufacturing operations, hiring Simpler North America to help them implement a companywide continuous improvement program that would remove waste and variability from their production processes, and replaces it with value-added activity. After two and a half years the company is starting to reap the benefits
of increased productivity and shorter lead times leading to their increased sales. In 2006 Kolbe and Kolbe reported record sales and is on pace to set another record this year.

In a recession, not all companies with superior lead times will increase sales like Kolbe and Kolbe, but they will have a slower sales decline than competitors. One effective strategy is to
target administrative lead times, such as quote cycles and order entry cycle times. Most
organizations can reduce lead times faster in these areas than in production, which can have a
big impact on getting and keeping customers.

Unfortunately, many organizations that manage to reduce cycle times fail to establish the
organizational practices that will allow their customers to enjoy the benefits, and thus miss out on
the potential sales benefits. To hold onto such gains managers have to change work policies.

Following the administrative example above, they may need to require that all quotes are
completed each and every day, which means that people will have to be more flexible and willing
to work overtime if there is a surge in quote requests or orders. Supervisors will also need to
understand that shorter lead times will bring in enough additional business that will more than
cover the overtime costs that may be incurred in order to maintain short lead times. Such an
approach requires a change in mindset for most organizations, but a recession creates an
excellent “burning platform” for creating a sense of urgency and instituting such changes.

In a down market, cash flow becomes very important. This is especially true in the current
recession, which is being exacerbated by credit contraction and tighter lending standards across
all areas of the economy. Inventory can lock up significant amounts of working capital. Improving
material flow and reducing lead times will free up cash by reducing inventory levels. Lower costs
will also improve cash flow by improving margins.

While many manufacturers have some opportunity to reduce scrap or other forms of waste, for
most the most significant controllable cost is labor. In a typical manufacturing firm the material
costs are set by the market and are not that different from one firm to the next. But people costs
can vary based on location as well as differences in productivity, processes and strategy. Some
industries, like health care, really only have one cost--people--all other costs are insignificant by
comparison.

The number of people that it takes to get the job done determines a host of other costs, such as
the number of office cubicles, desks, and computers, as well as the IT staff required to support
those computers. Think about how many parking spaces are required for each employee and the
cost of office space for each employee. During a recession company leaders should be thinking
about how to maximize every investment in space in terms of revenue per square foot.

Many managers talk about productivity, but few measure it, and even fewer are actually able to
improve it at a significant rate. Despite claims that it’s impossible to measure in product
development or sales, these areas are often ripe for productivity improvements. They are also
very often the source of many out-of-control costs. Focusing on such costs should not undermine
human development initiatives. Linking people to specific processes, whatever they may be, as
well as the mission, vision, and purpose of the organization, lies at the heart of the business
system.

One effective approach is to track individual productivity measures based on the total cost of
each employee. Everyone has a personal target of two times their annual employment costs as a
target for process improvements within their value stream. Such a metric forces people at all
levels and in all value streams to participate in the organization’s lean efforts and work to improve
productivity. World-class companies, which rarely layoff people, typically have 100% of
employees engaged in some form of productivity measure.

As a general precaution, it’s almost always the right thing to do for an organization to freeze any
new hiring at the first sign of a recession. If sales fall faster than the rate of attrition can absorb,
requiring some layoffs, it is better to take a large cutback early, and then use lean strategies to
handle the workload. This might mean making a reduction that initially requires some overtime
from the remaining employees, which will be reduced or eliminated in subsequent quarters as
sales decline. These are the tough decisions that most managers don’t want to make, but lean
leaders should constantly be developing appropriate response plans to changes in market
conditions.

The Purposeful Plan
If the company hasn’t done so already, it’s not too late to pull together the management team and
discuss the implications of slower sales and the areas that need to be focused on in order to
minimize any negative impact. This may mean attacking value streams that require a lot of people
because of the potential margin and productivity gains. During down cycles, we find that most
manufacturing companies focus on the delivery value stream or the conversion of raw materials
into finished goods. To drive revenue they invest time and resources to improve those value
streams that have the most potential for growth as a result shortened lead times. Even if such
operational and sales gains can be realized, if the recession is long and deep, further cost
reductions may be required.

Of course growing productivity should be at the top of the management team’s agenda well
before key market indicators signal that it’s time to act. The current recession will require
changes whether we want to make them or not. The strongest companies will make those
changes that effect all three elements of the lean business model, leading down the path of
continuous improvement.

Sustaining Lean

Publisher: Manufacturing Engineering
May 2007 Vol. 138 No. 5

Nothing can replace the direct involvement of leaders





Leading the Lean Enterprise TransformationGeorge Koenigsaeker, Leading the Lean Enterprise Transformation

Many of those on the lean journey often ask the question: "How do we sustain our lean effort? What will it take to truly continue on the path?" While there are probably a number of answers to this question, I would like to suggest a few derived from my own experiences.

First, what is the predominant culture of most firms today?  
                           


I would say that it's "firefighting." We focus on delivering today's product or service, and we rush to do so. One consequence of this emphasis today is that we do not step back to take the time to "ask why five times," as Toyota would do.                                                                                                               
So we keep working really, really hard, but our system does not get any better, because we just jump on the first solution for problems—elimination of the surface cause—as they crop up during the day. The net of all this is that we have gradually built up a system under which we run our businesses, but we do not look at improving the system on a regular basis.
And what is the culture we need to develop to survive and thrive for the long term?                                                                                                       What we need to build is a learning culture—and I maintain that the best model of that is the culture of Toyota. What's so unique about Toyota's approach to work is that they have organized themselves to be constantly reviewing all their processes (the steps by which their work is done), and improving them.

So the key to sustaining lean is building a culture that practices process improvement as part of daily life.                                                                         
How long will this take? Would it be reasonable to assume that it might take a generation of management to establish a totally different culture? After all, changing from a fire-fighting culture to a process-improvement culture requires embracing an "opposite" approach, and "opposites" are very hard for adults to learn. 
While I can't really know which practices have been most important in establishing this learning culture, the thing I am most proud of is that, over 20 years, I led 11 corporations, as either President or Group President, on the lean journey. And today all 11 of them continue to practice lean-process improvement. They have managed to do this through several generations of leadership change.

A few thoughts about what has helped these firms sustain a lean culture: Toyota believes that you drive improvement of every line item in an income statement and balance sheet by simultaneously improving the four True North dimensions of improvement—at annual rates of 10–30%. The True North metrics include: 

Member Development (processes are improved by people who learn how to study and improve their work);
Quality;
Lead Time; and
Cost/Productivity

If you want to advance these four dimensions of improvement, you will need to study your work—your processes—throughout the enterprise. That means studying both office/transactional/administrative processes and manufacturing processes—at a pace that will generate the desired pace of improvement.

After all, you would expect the pace of improvement to be proportional to the number of processes that you improve. And the double-digit results that a company like Toyota would expect each year require a lot more process improvement activity than most persons would imagine. A firm of 10,000 people might require week-long kaizen events devoted to studying the work of the firm, at a pace of 1000 team-weeks per year.

Don't panic just yet. You see the point; driving fundamental improvement is a lot of work. Firms that have achieved this level of process improvement have built up to this pace over a period of 3–4 years. They have come to realize that a significant pace of improvement is driven by a significant pace of process study—so they see this work as a productive, valuable investment. The good news is that well-run process improvement typically has a payback on all the costs involved of 90–120 days from the productivity gains alone, not counting inventory cash, improved customer quality and lead times, and other metrics.

It turns out that you drive most lean results from organized kaizen events that are driven by an enterprise value stream analysis and improvement plan. It also turns out that lean is learned from personal participation in these hands-on improvement events. You don't really learn much about lean from books. It's the struggle of applying new tools, new principles, and new practices to a "chunk" of your existing work—expecting major improvements to be implemented within a week—that drives individual learning curves and begins to build a new culture.  

So these kaizen events really do three things at the same time. They actually redesign processes and delivery results, but they also are the key way anyone learns to understand the practice of lean, and they accumulate into building a new culture—a learning culture.

Let's think about leadership a bit here. When an organization starts the lean journey, the odds are that almost no one will have deep knowledge of the way ahead, and almost certainly senior leadership will not know what is involved. In some respects, the first step is for leaders to learn how to see waste in their organizations. Toyota believes that the principal form of motivation for improvement is derived from learning to appreciate how much waste exists around you in all the work you and your organization do every day. A lean core-concept is the idea that only a few steps in each process truly transform material (or information, in the case of administrative work). These are the few value adding steps.                     




Our processes are full of other steps—other work—that does not transform the material or information. In lean terms, that work is categorized as non-value-added.

Most of us are surrounded by the work we and others in our organizations do—but we see it all equally; it is all just work. One of the key outcomes of participation in kaizen events, especially for leaders, is to begin to see how much non-value-added work exists in our processes, and also to understand that we can remove a large portion of it—within a week.

A Wisconsin healthcare group, Thedacare, has studied member survey data very carefully, and correlated scores with the number of event experiences that each person has accumulated. What the data show is that it takes two weeks of kaizen-event experience before the needle moves in terms of positive member survey scores—and that it keeps moving right through about eight events per person. This result is a good measure of the culture change that takes place. So it appears that an ideal approach would be to eventually get all leadership (and the whole organization) to gain eight weeks of kaizen-event participation. In practical terms, it takes years to get to this level, even if you are on a fast pace of improvement. But you need to get on the path.

A pair of examples may help you appreciate what's involved. Led by its CEO Stan Askren, HNI Corp. (Muscatine, IA), the big office furniture group, requires any new manager in the firm to get four full week-long kaizen event experiences in their first year of employment, generally in the first few months. And for every year after that, they must get two more week-long improvement experiences. One lesson learned was that most leaders know how to talk-the-talk and sound like they are "doing lean," but real results are only achieved by those executives who get real experience.
Danaher Corp. (Washington, DC), which is led by CEO Larry Culp, has a Lean Immersion course, where senior leaders spend 90 days doing nothing but lean-improvement work. 
Danaher grows by about 20% per year from organic growth, but also benefits from a steady flow of new acquisitions paid for by the cash flow generated by lean efforts at the current organization. In fact, since the beginning of their lean work at Jacobs Vehicle Systems Inc. (Jake Brake) in 1987, the financial performance of Danaher exceeds that of Berkshire Hathaway, the organization run by the famous investor, Warren Buffet. In North America, Toyota conducted a hansei—a deep reflection—on the depth of understanding of the Toyota Way at the company. They concluded that the organization also needed to require leaders to get regular kaizen-event (jishukin in Toyota talk) experience on an ongoing basis.

You've probably realized that a very big part of sustaining lean is establishing a practice of leadership participation on kaizen events on a regular basis—forever. Every time a leader is on a team, it reinforces for that person the reality that there is still a lot of waste in the work being done, and also reinforces the fact that you can remove a lot of this waste in as little as a week. The motivation to improve that this awareness gives to leaders is essential to sustaining lean.

There's a direct link between achieving double-digit annual rates of improvement on the True North metrics (which will in turn drive all line items of the income statement and balance sheet in the right direction), and a strong pace of studying and improving processes. One of the issues for leadership is that it is hard—perhaps impossible—to really define what the organization will look like after another year of lean transformation. Frankly, you've never been there. One lesson learned, for me, has been that tasking yourself to hit your True North metric performance, year after year after year, is a significant part of finding your way on the transformation path. If you start to fall behind in one of the True North metrics areas, it's time for a "hansei" that can lead to corrective action.

This action, in turn, is usually some combination of increased kaizen-event activity directed at that performance dimension, and some addition of lean tools—or increased use of lean tools—across the full organization. So the focus on gaining True North performance each year also pulls the improvement activity needed to get there.

A rule of thumb that I use is that you will be substantially lean when you have studied every process from beginning to end, at least five times. Typically, you can remove about half of the waste in a process every time you study it, but it is impossible to see all the waste in the process at any given point in time. If you think about going through every process in your firm at least five times, you begin to understand several things: that this will perhaps take a decade to do; that you will get better at every step along the way; and that you will need to organize to support this effort over a long period of time.

The real reason to consider five passes through every process is that, as an organization, after you have done this work, you will realize that there is, in fact, no end to improvement. And you'll know that you want to continue this journey forever. It seems to me that we really do not understand the phrase "continuous improvement." We think "improvement," and we imagine it to be a one-time step. But the idea that continuous improvement could actually be continuous is not something we truly believe. After five or so passes through every process, however, you will have built a new culture that believes in continuous improvement. And once you've established this new culture, sustaining lean will be second nature.