Column Archive: 2009

Lean thinking dictates that we try to turn any "problem" (or need, however big, however vague) into an actionable problem that can be analyzed. All problems come down, one way or another, to SQDCM (Safety, Quality, Delivery, Cost, Morale). How can we identify a gap (between the way things are and the way we need or want them to be) that we can analyze?

Furthermore, as you know, we try to never jump to conclusions, to solutions. That understanding is quite widespread now in the Lean Community, in theory if not practice. What is less understood is that, not only do we not jump to solutions, we don't even jump to the five whys. First, we try to size up the situation. Define the problem. Identify the "gap." That’s all I'm going to try to do with this discussion - identify a gap, not go anywhere near prescribing a solution, and stopping shy of even doing the full causal analysis. We'll content ourselves with merely identifying the factors that must define the gap. That's all.

Most discussions of the U.S.A. healthcare problem focus on the famous factoid, "100,000 deaths caused by less-than-the-best health care" provision. We should note: (1) that data is ten years old so the situation is arguably worse today than it was then, and (2) the data was a very rough generalization - the actual data was "... between 44,000 and 98,000 deaths...", a figure that is routinely rounded up to 100,000.

I am one who often argues against starting with the cost equation (the "C" of SQDCM). Quality is usually a much better lever to use to rally the troops. We all know that poor quality ultimately results in higher cost. We also know that shortsighted cost-cutting usually results in poor quality. A downward spiral.

In the case of U.S. healthcare, however, the problem that is uniquely America's is cost. All the waste and operational problems that we - including us lean enthusiasts - love to highlight are shared roughly equally around the world. By "around the world" I am talking about ALL countries that would be even remotely comparable to the U.S. in terms of socio-economic structure, including Canada, Australia, New Zealand, the United Kingdom, Japan, Germany, northern Europe, and Taiwan. I have visited hospitals in most of those countries (and others) and, on the surface at latest, the amount of waste and problems at the operational level appear essentially the same.

Those countries mostly pay roughly 8% of their GNP on healthcare (Germany and some northern European countries are higher, a little above 10%). Americans pay over 16% and rising. That is, Americans pay double, a big difference. It is a difference that also sits there as an easily doable gap analysis.

In all the debate, have you seen anyone tackle the problem by even discussing this gap, much less really analyzing it? I have seen, in academic circles, reams of data parsing the overall healthcare costs of various countries, but nothing in the way of a simple gap analysis that might shed some light - just a little please - on the U.S. national debate.

We lean folks take a certain kind of pleasure in pointing out the tremendous amount of waste and the poor quality that we can easily see in our hospitals. It is true that tremendous waste exists. But it would be simply incorrect to state that that waste is the cause of the U.S.A. healthcare crisis: All those other countries have the essentially same amount of visible waste in their hospitals! Walk through a hospital in Australia or Canada or Japan. The same typical problems exist. Errors, long lengths of stay, unnecessary admissions. Exactly the same. Indistinguishable.

But, they pay half as much. Each of those countries pays half as much, for better overall outcomes. And with the same (roughly) amounts of "waste" in their operational systems.

There is something seriously broken in our health system at the macro level. I've read a good bit about this topic, it is at the core of the national healthcare debate, yet all we hear are people screaming on both sides with no one talking about the problem. Or, not, at least, talking about this Gap.

The U.S. is the single outlier. So there must be something quite specific going on. Many people have their "pet" special cause. Some love to point to doctor pay. Others to exorbitant insurance cost due to frivolous lawsuits. Let's say for our purposes here that there is at least SOME validity to all those pet causes. But, let's also take a closer look and not pass judgment (yet) on the relative value of the various causes.

Certainly the causes of the Gap must be many and complex. But, surely we can identify a few buckets of cost, categories of activities where the costs lie. I am no expert in health care cost so am not the most qualified person to take on the analysis with the seriousness it deserves. But, here are my five buckets of cost that account for the Gap. I will try to be non-denominational - there will be much disagreement on the relative contributions of the buckets, but the idea I'm putting forth here is that the buckets together should account for essentially 100% of the cost gap. (Or, conversely, it is absolutely true that 100% of the Gap can be broken down into identifiable units of cost. Those units can surely be grouped - or "bucketed" - for analysis purposes. This is the way Lean Thinkers try to approach any problem. If it's a cost problem, before we discuss solutions we ask: "What are the contributors of cost?")

The U.S. Versus the World Healthcare Cost Gap:

1. Inappropriate care. Some would argue that this should be a sub-category of the medical malpractice problem (below), since many inappropriate procedures are driven by fear of lawsuit. No doubt this explains the reason for a number of inappropriate procedures, but not all. I suggest three primary reasons for the great amount of inappropriate procedures conducted in the U.S.A:


1. Misuse of emergency facilities. (This is the favorite of the left-wingers. Don’t worry, you right-wingers get your turn below.)


2. Defensive medicine. (This is the favorite rationale of the right-wingers.)


3. Profit. (Surely some doctors sometimes prescribe and perform procedures that make a lot of money because they make a lot of money.)

(By the way, Lean Enthusiasts – Which of the Seven Types of Waste is "inappropriateness?")

2. Medical malpractice lawsuits, with all its associated costs.


3. Large population of uninsured. (Their care does get paid for eventually, somehow by somebody, and surely not in the most optimum way.)


4. U.S. consumers pay more for research & development of new medical technologies and pharmaceuticals. (Most new technologies come from the U.S., and Americans pay for a disproportionate share of its development, through higher prices for the products once they reach market.)


5. A convoluted system of middle agents in the form of health management organizations and insurance companies. It only takes two to health care -- a provider and a patient. All the rest is muda, of either Type I or Type II (or, as Toyota calls it, Value-Creating Work and Non-Value Creating Work).

You know, it could be that the content of the extra 8% is just that the US has more of everything, in roughly equally amounts. Just general, overall excess. Could be. It could also be that the US population is just unhealthier. There's a sixth bucket: unhealthy population. So all we need is free access to a local gym and membership to Jenny Craig.

To switch gears just a bit, last week we had a great discussion about some of these issues on the University of Michigan campus. John Campbell, professor emeritus of political science and my long-time mentor on all things Japanese, joined journalist T.R. Reid, author of the current NY Times bestseller, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care for a fascinating talk about national healthcare systems.

Prof. Campbell co-authored a book with Dr. Naoki Ikegami, Japan's top health system economist (and who appears in Reid's PBS documentary) which you must read if you are interested in a fascinating detailed look into healthcare in Japan, "The Art and Balance of Health Care Policy: Maintaining Japan's Low-cost, Egalitarian System" from Cambridge University Press (1998). Interestingly, the book was a best seller in Japan ten years ago yet went totally unnoticed elsewhere. I recommend it highly - it is still remarkably relevant to the national debate and efforts to reform U.S. healthcare financing and delivery systems. The highlights:

• Japan pays half what the U.S. pays.


• Japan has the highest life expectancy in the world.


• Japan has the lowest infant mortality in the world.


• Japan has universal coverage which is extraordinarily egalitarian.

Yes, as many will quickly point out, Japan's population is very different from that of the U.S.A. But, as T. R. Reid has found, the variance isn't just between the U.S. and Japan, it's between the U.S. and the rest of the entire developed world.

I am identifying the U.S.A. healthcare crisis as one of cost. I'm not sure of the solutions, or even the ultimate causes. I also know that, even aside from the cost problem, there is MUCH to be done - U.S. healthcare is a broken system on many levels and there is much lean work to be done to improve the situation. But, the U.S. national healthcare crisis is a crisis of cost. As percent of GNP, costs will pass 20% in no time at all. The cost versus revenue lines are converging, just as I saw them converging in the auto industry beginning many years ago. It will crash just as the financial system crashed last year. And THAT is the GAP that can be identified by comparing the U.S. national healthcare system to that of other countries.

Below, I attach some very interesting data for your reference. Rather than the familiar WHO statistics, this is from the OECD. The data seem to do a good job of showing apples compared to apples, healthcare dollar to health care yen or pound or Euro. (The real story to the data (besides the obvious which is seeing how ridiculous the U.S. looks overall) is the fact that the U.S.A. started from a high base (back in the 60s) AND has had a high growth rate. All the other countries EITHER started at a lower base rate OR started high like the U.S. but found ways to slow the growth. All the U.S. can hope to do now is seek ways to start to slow the growth.) You can see that clearly from the first chart, created by Mark Graban. For those of you who are interested in pursuing this important topic on an on-going basis, and with the seriously which it deserves, I suggest you join Mark at http://www.leanblog.org/search/label/Healthcare.

Note that ALL of the data below and the Cost Gap Analysis above represent only the first two sections of an A3. Not only do Lean Thinkers avoid jumping to a conclusion, for complex problems like this we don't even jump to five-why analysis of the root cause until AFTER we have broken the problem down so we can see it. In this case, the Gap is so clear in cost terms, that it begs a thorough A3 style analysis. I’ll stop at this point. I hope some of the lean healthcare specialists among you will pick it up from here!

The following information is from the Organization for Economic Co-operation and Development (OECD) comparing the level and growth rate of health care spending in the United States with other OECD countries. The data I show here are a couple of years old – you can find up-to-date data yourself on the OECD website.

*Value shown is for 1971.

^Break in series; see "Comparability over time" at http://www.irdes.fr/ecosante/OCDE/411.html.

^eOECD estimate.

NA: Not available.

Notes: Amounts in U.S. $ PPP. Germany is not included on this table because its data are not comparable over the time period due to reunification.

Source: Organisation for Economic Co-operation and Development. OECD Health Data 2006, from the OECD Internet subscription database updated October 10, 2006. Copyright OECD 2006, http://www.oecd.org/health/healthdata.

^Break in series: Austria, 1995; Belgium, 2003; Denmark, 2003; Finland, 1993;
France, 2002; Ireland, 1990; Japan, 1995; Luxembourg, 2003; Netherlands, 1998;
Norway, 1997; Sweden, 1993; Switzerland, 1995; United Kingdom, 1997, 2003. See
"Comparability over time" at http://www.irdes.fr/ecosante/OCDE/411.html.

^eOECD estimates: Japan, 2003; Netherlands, 2003.

NA: Not available.

Notes: Growth rates reflect average annual change in health expenditures per capita, in national currency units adjusted to year 2000 GDP price levels. Germany is not included on this table because its data are not comparable over the time period due to reunification.

Source: Organisation for Economic Co-operation and Development. OECD Health Data 2006, from the OECD Internet subscription database updated October 10, 2006. Copyright OECD 2006, http://www.oecd.org/health/healthdata.

^Break in series; see "Comparability over time" at http://www.irdes.fr/ecosante/OCDE/411.html.

^eOECD estimate.

Source: Organisation for Economic Co-operation and Development. OECD Health Data 2006, from the OECD Internet subscription database updated October 10, 2006. Copyright OECD 2006, http://www.oecd.org/health/healthdata

*Value shown is for 1971.

^Break in series; see "Comparability over time" at http://www.irdes.fr/ecosante/OCDE/411.html.

^eOECD estimate.

NA: Not available.

Notes:
Germany is not included on this table because its data are not comparable over
the time period due to reunification.

Source:
Organisation for Economic Co-operation and Development. OECD Health Data
2006, from the OECD Internet subscription database updated October 10,
2006. Copyright OECD 2006, http://www.oecd.org/health/healthdata.

^Break in series: Belgium, 2003; Denmark, 2003; Ireland, 1990; Luxembourg,
2003; United Kingdom, 2003. See "Comparability over time" at http://www.irdes.fr/ecosante/OCDE/411.html.

^eOECD estimates: Japan, 2003; Netherlands, 2003.

NA: Not available.

Notes: Germany is not included on this table because its data are not
comparable over the time period due to reunification.

Source: Organisation for Economic Co-operation and Development. OECD Health Data 2006, from the OECD Internet subscription database updated October 10, 2006. Copyright OECD 2006, http://www.oecd.org/health/healthdata.

At AME's annual conference in Covington, KY, two weeks ago, Sami Bahri used his book, Follow the Learner, to base a great one hour keynote, the fascinating story of learning and applying lean thinking to his dental practice in Jacksonville, FL.

I first visited Sami at his clinic when he was fairly early in his journey. By then he had already installed most of the familiar pieces of a lean operating system in his clinic, but there were still PLENTY of bugs to work out (as always). So that condition actually made it a fun time to visit. What was most impressive at the time was the enthusiasm of Sami and staff. Actually, what was MOST impressive was the PASSION of Sami himself.

Sami learned about lean from books, starting with Lean Thinking and Learning To See, and then ran across fellow Jacksonville area lean enthusiast Jerry Bussell (who also gave an unforgettable keynote at this year’s AME), who introduced Sami to many others in the lean community (including me, so thanks Jerry).

What is most instructive for all of us about Sami's story is that he was truly working through the application of lean thinking as a pioneer in his field. He had no role model for what lean might mean to a dental office. He had no sensei to help him. He just worked back from first principles, one at a time.

What does one-piece flow mean in a dental office? Is "one-piece" a patient, a mouth, a tooth, a cavity, a filling? What is one lot? How to figure out cycle times and takt times? How might heijunka work? What is pull?

Team involvement was never a question . . .

Today, Sami has some great advice for anyone looking to apply lean thinking to their business, especially anyone looking at application to a healthcare environment. After all, as one of the simplest of healthcare systems, a dental clinic is a healthcare system on a small scale - perhaps lessons learned there can provide a model for healthcare on a larger scale. Here are Sami’s rules:

- Where to start?
- What is the enemy?
- How to go about it (fully install, disseminate, sustain, grow)?

Start with one piece flow. That means first of all deciding what IS one-piece flow in this environment. That is, what is "one piece"? One piece of what? Sami decided that one piece is one tooth.

If one tooth constitutes one piece, then what is one lot? A procedure? An arch? Sami decided to go with one mouth as "one lot."

This is the same question that has to be asked in any environment. We often used the term and concept of "base unit" - what is the "base unit" of production that we will use to organize our planning, to design our primary flow to which we will link support flows? This is a basic question that has tripped up more than one nascent lean initiative.

Note that in Sami's case, he could have decided on the patient as the base unit, the single "piece" that he wanted to flow. Answering this question is often not nearly so easy as it first appears. And often, it becomes a matter of deciding on SOMETHING to get started, recognizing that the point is to make continuous improvements anyway.

With the base unit, or "one piece" determined, the next question is how can we make it flow? In addition to many of the standard questions, Sami devised this matrix to help him segment different types of "product families."

With this organizing principle, Sami made the switch from batch scheduling to flow scheduling. This enabled him to achieve dramatically improved results from the perspective of both the customer and his business.

And this segmentation between predictable versus unpredictable, between simple versus complex (and sometimes short lead time versus long) is an organizing principle that is proving extremely helpful in figuring out how to achieve better flow and ease the chaos of complex, highly variable environments, healthcare and otherwise.

As usual, we can see the improvements in the form of drastically improved lead time:

The reduced number of visits - and total of number days from beginning to end - is great for the customer. For Sami's business, it also impacted productivity:

The enemy of flow and lead time reduction, Sami found, was "departments." Everyone thinks the enemy in health care is variation, variation of patient condition and treatment. The real enemy, however, is "departments" and the challenge in trying to synchronize their operations.

The challenge is in how to coordinate support services to support the one-piece flow once it has been identified. This is the same whether a dentist’s office or any out-patient medical clinic. It’s essentially the same even in a hospital, just on a larger scale.

Ultimately, Sami realized that the target state should mean creating the conditions in which "patient stay time equals treatment time." Sure enough, when you think about it, that should be the target for any health care system. Sure enough, that should be the target condition for any operation, but in manufacturing, we refer to "treatment time" as "processing time" and "stay time" is "lead time."

So, at the end of the day, we can easily see that Sami wound up in the same place Ohno did, expressed by his famous statement, "All we are trying to do is shorten the lead time . . . " But, anytime we face a new situation, as Sami did as the pioneer lean dentist, it isn’t immediately obvious what these things mean.

So, I have a recommendation. If you live anywhere around Jacksonville, FL, why not give the Bahri Dental Clinic a try. In fact, give it a try, and then review the experience for this column, send it in and we'll print it in this space. I did NOT tell Sami that I was going to suggest that you show up and review his clinic. So, you can do it incognito, like a restaurant reviewer. Unless he reads this. Then, if you show up and start asking questions like, "So, Dr. Bahri, how do you balance the work for cycle time variations between a minor cavity and a root canal . . . ?", he may begin to suspect that you're there for more than a simple teeth cleaning.

Bahri Dental Clinic
8131 Baymeadows Circle West, Suite 102, Jacksonville, Florida 32256
sami@firstleandentist.com

From the Editor: To learn more about Dr. Bahri's work and the application of lean principles to healthcare, use the following links.

Video Podcast with Dr. Sami Bahri, DDS, "The World's First Lean Dentist"

Follow the Learner Webinar Follow-Up Questions & Answers

Dentist Drills Down to the Root Causes of Office Waste

Key Concepts of Lean in Healthcare Workshop

Part 3

A Simple Outline for the Purpose, Process, and People of Standardized Work

In the last two columns, I introduced five neglected aspects of standardized work. Several people quickly requested a column on what, exactly, SW is. Here's a quick introductory outline, following LEI's Three P framework of Purpose, Process, and People. Incorporate these things when setting about to establish standardized work.

Purpose

i. - Baseline for improvement.

ii. - Means of realizing attainment of org goals at the frontlines, where the real work of the organization takes place.

iii. - Means of engaging the people who do the work.

In other words, remember what you want it for:

1) Commitment not compliance

2) Improvement not steady state
-->There is no steady state!

3) Creativity, innovation, problem-solving, improvement not following the rules

4) Initiative not following orders

Process

i. - Work standards

ii. - Safety, quality, performance

iii. - Observation and process study

iv. - Three Basic Elements of SW

a) Takt Time and cycle time (TT vs. C/T)
- In other words, timing - the timing demanded by the customer and the timing constraints of processing capability

b) Sequence (including layout and man-machine combination (with process capacity sheets and SW combination table)
- In other words, determining the optimum sequence of producing the product or service - first do A then B then C.

c) S-WIP
- In other words, the amount of in-process "stuff" that is required, no more, no less. That stuff may be material, parts, information.

v. -Standard process for making changes (i.e. Suggestion System)

People

i. Means of engagement, involvement, ownership

ii. Each worker as entrepreneur

iii. QC and SS

iv. Trained

1) TWI - Training Within Industry
- If you don't know about this program, learn about it.
- Job Instruction, Job Methods, Job Relations
(In Toyota's case, standardized work and kaizen training has replaced JM, but companies would be well-advised to consider starting with JM, then consider Toyota-style SW later)

2) Skills Matrix
- A plan for every person!

3) Practice, practice, practice

v. SW for non-standard work

a. Three levels of SW

i. Level 1 - repetitive production-type work

ii. Level 2 - supporting repetitive work

iii. Level 3 - knowledge-based or project-based work

b. SW kaizen versus creative or knowledge work

i. PDCA (Lean Product and Process Development by Al Ward)

vi. Coaching, questioning (right questions), not telling, make people think and take responsibility

vii. Assign greater and greater responsibility

And remember: The technical/process side and the socio/people sides of the standardized work equation are equally important. Well-designed standardized work represents the technical and human dimensions of work in equal measure. The example of assembly line standardized work from Kaizen Express is a perfect illustration:

Look at your standardized work and structured improvement process (kaizen) - that is where you will find your culture!

john

John Shook, Senior Advisor

Lean Enterprise Institute, Inc.

Last column we looked at the first three of my Five Missing Pieces in Your Standardized Work. Let's pick up where we left off, with Neglected Piece Number Four -- practice.

4. Practice, practice, practice…

For some reason, most of the time most of us come to see our day-to-day work as mundane. I guess it's because we do it every day.

But, is that necessary? Craftsmen do their work every day. Artists paint or sculpt every day. Athletes run or swim every day. Musicians play every day. But we choose to put our daily in a different, lesser, category. The focus that lean thinking puts on frontline work changes our attitude toward work. It elevates it, to higher level of visibility and importance. In my recent column about Starbucks, I suggested "…think of the best bartender or waiter/waitress you've ever seen. Remember marveling at how he or she could handle orders coming from all directions, without missing a beat."

Mastery of any skill requires diligent practice. When I was there, Toyota typically followed a sequence whereby workers would first master one job, then move to the preceding and following jobs, eventually mastering each job of the team. When I was at the Takaoka Plant, the process of learning each of the five or so jobs in a team took several years.

In the book Outliers, author Malcolm Gladwell explains that there is great evidence to support the argument that mastery of any skill requires about 10,000 hours of practice. Musicians, athletes, craftsmen, artists, professionals of any discipline can all be observed as requiring this 10,000 hours hurdle. Gladwell provides several examples that reminded me of some of my own favorites:

- Tiger Woods, working with a coach to re-build his swing from the ground up following his first Master's win, possibly the greatest victory ever in golf.

- Michael Jordan may have been about the most talented player of all time, but every observer and Michael himself emphasizes that the real distinguishing factor was that he practiced harder than anyone else and was the most prepared.

- Sonny Rollins, after (that would be AFTER) achieving stardom as one of the very top saxophone players in the jazz world, took three years off to take his playing to a new level. Practicing alone every day on the Williamsburg Bridge in New York City, he blended his notes with the passing traffic so no one heard his new sound until he felt it was ready. His song and album "The Bridge" were instant classics.

There is a saying in Japanese, "Three years on a rock," meaning that it takes about three years to deeply learn any subject of substance.

- When I was at Toyota, there was a saying that one could understand the basic concepts of TPS in three hours, learn to "explain" the basic concepts of TPS in three days, and be proficient in "actualizing the concepts" of TPS in three years.

- In the engineering and R&D world of Toyota (quite independent from the rest of the company, with even its own separate Human Resource Development Department!), it was commonly stated that, "it takes 10 years to make an engineer."

- For quick reference, Gladwell's 10,000 hours would ordinarily translate into about four years of essentially full-time effort, or longer if pursued at a more leisurely pace.

Of course, the specific numbers that Toyota (or Malcolm Gladwell) puts on these things is interesting but not exactly the point. The point is … what do you think?

-›What is the fundamental thinking regarding skill development that informs your organization’s approach, system, and methods of developing your people??

(Toyota's training, especially for employees who work on or around the front lines, is heavily informed by the Training Within Industry (TWI) program they learned from the U.S.A. following the Second World War. A little more on TWI in the next section, but if you don't know about TWI, learn it!)

5. Don't forget the critical role of the leader/manager

When I encounter managers struggling with getting standardized work firmly established, their questions and concerns always center around the worker, around how to get the worker to follow the standardized work. Usually, however, bigger problems are always found well before getting to the worker, often beginning with the role of the leader, especially the immediate front-line supervisor.

The front-line supervisor won't change his or her behavior from compliance officer to support for success unless (1) the new expectations are made clear, (2) the requisite training is provided, and - last but not least - (3) time allocation is provided. What that adds up to, of course, is standardized work for the supervisor.

My first encounter with SW was in January 1984 at Toyota's Takaoka Plant. I was fortunate to be provided the experience of six learning-packed weeks working production jobs in the each of the major auto processes: stamping - body welding - paint - final assembly (followed by time in the production control office learning kanban calculations, observing training, and learning other similar support operations). All my leader/mentors were outstanding, patiently (mostly patient) teaching me each job. It was in final assembly that I had my most intense experience with standardized work and the role of the team leader.

I was too tall for the job I was assigned on Toyota's Corolla assembly line. I’m six feet tall and Toyota's guidelines in Japan would ordinarily have placed me in other jobs rather than getting in and out of a Corolla 500 times a day. But, an exception was made in my case since I was to perform that particular job for only one week and the job was one that was being readied for trainees from NUMMI who would begin arriving a few months later.

In addition to being relatively tall, my legs are long for my height. So, I found it hard to do the job exactly as instructed, which was to enter and exit the vehicle in the highly specified proven, safe, and effective manner - butt first. So, I quickly found my workaround, which was to enter right leg first. Entering right-leg first was no problem in and of itself, but it meant that my legs would get stuck in an awkward position. It seemed okay to me, and was "easier" or preferable to me than doing it the prescribed way. (This all falls under the heading of "knack." When Toyota teaches standardized work, in addition to stipulating the sequence of work elements - as noted previously under the three elements of SW - the individual elements of work are taught using the TWI Job Instruction methodology in which many elements of the job require a certain "knack" to accomplish satisfactorily. People generally assume "knack" to be an individual thing, not to be specified. But, the TWI and SW approach stresses that "knack" can and should be standardized, and can therefore be improved.)

My team leader observed what I was doing. He watched for awhile, his brow steadily furrowed, and soon asked me why I couldn't do it as I had been instructed. I explained that it was easier for me to do it my way. He listened, unconvinced, and observed me awhile longer. He asked me to try it the "right" way again, explaining that he was fearful that I would hurt myself if I kept up with my improvised repetitive motion over and over day after day. Perhaps My Way seemed easier to me at the time, but the position I was maintaining to do the work would surely cause strain which would injure me over time. I complied with his instructions and tried again doing the job the standard way, but, sure enough found it very hard to perform the work that way. So, I explained that I would really have to go back to doing it My Way. He said, okay for now, again clearly unconvinced, with concern on his face, and again stood there observing me as I did the job.

Then, as I did the job and he observed, I began to feel his observation and my awkward work slowly attract a crowd. Before long, the group leader (my team leader's boss), some adjacent team leaders, and others I didn't know where all standing there, watching me work. I didn't have time to worry much about it. My takt time and cycle times were about 56 seconds (on average, vehicles would pass through that had different option content, so some would require well over 56 seconds, some less - the vehicles were arranged in a sequence - a heijunka sequence - that assured that two high-content vehicles never succeeded each other, there would always be a lower content vehicle that required less time in between) and I usually had no extra time to chat or divert my attention as I did my job.

Then I noticed that the group of observers huddled, akin to an American football huddle, engaged in intense discussion. Then, as they broke their huddle, my team leader tapped me on the shoulder, instructed me to step aside, and took over my job. He and the others had come up with a NEW way to do the job, neither the original SW way nor my improvised method, which they all agreed was going to injure me if I kept it up. My team leader tried out the new procedure, as I now joined all the others in observing. When the New Method seemed to work to his and the others' satisfaction (many heads nodding approval, but still many furrowed brows as well - this was important stuff), he asked me what I thought. I gave his suggestion a try. Sure enough, the new procedure worked for me, and to the satisfaction of the impromptu task force. The other observers had included, I discovered later, a safety specialist.

So, safety comes first, and there are aspects to the design of successful work that don't necessarily appear on the various standardized work worksheets. Simply, the team leader (front line supervisor) must understand the work, deeply. Most importantly, first we are going to observe the work closely, ensure it for safety and effectiveness. Then, we'll work on efficiencies, improvements, and other problem solving. And, beginning to end, we are going to ... observe the work ... very ... closely.

More on leaders ...

I've been discussing here the key role of the front- line supervisor, but there is a role here for senior leadership as well. Too often, SW is viewed as one of those mundane things that are taken for granted. People assume that SW is working and if it isn't, well, people should just do their jobs better.

But, everyone has a role to play here. Engineering needs to design work that is easy to perform in a standard way, and easy to improve. Middle management needs to support the front-line supervisor so that he or she has the TIME available that is necessary to support the workers. When I worked at the Corolla plant in Toyota City, roughly half of the team leader's time was made available to help his team members when they got into trouble. And he had only five or so workers to support. So, here is where you should be asking yourself here, "Do we make that kind of support available to our workers ... ?" As I visit companies, it is very rare that I see this kind of commitment to support the frontline supervisor in supporting the worker.

Senior managers need to take the time to understand what SW really is and how it is nothing if not a mechanism to enable them to achieve their corporate objectives. At some point every high level objective comes down to a matter of how someone on the front lines performs his or her work. This is where, as the saying goes, the rubber meets the road. Until it's reflected in someone's standardized work, any corporate objective or initiative is just talk or words on a piece of paper.

So, we are going to take responsibility to ensure that the worker learns, is supported and given every opportunity to succeed in completing the standardized work EVERY time he or she performs the work. Providing that support is the role of the leader: Much less policing of compliance to enforce SW; much more support to enable success.

Standardizing non-standard work

Now that we've established a baseline understanding of basic, Toyota-style, standardized work for production workers, what about standardized work for non-standard work??

This topic is less a matter of a "here's how Toyota does it" and more of a question to explore together. I think of SW in three levels (this is similar but different to the Toyota view):

a. Level 1 - repetitive production-type work

- › This is what we've been exploring in this column

b. Level 2 – supporting repetitive work

- › I discussed this briefly in Neglected Aspect Number Five – the role of the leader.

c. Level 3 – knowledge-based or service or project-based work

- › Even for those kinds of work, success is still a matter of
- Timing
- Sequence and content (including "knack")
- How much "stuff" we need to complete the work
- Output

- › SW/kaizen versus creative or knowledge work
Standardized work is ALL about PDCA, establishing conditions in which PDCA is possible, and then carrying out structured learning and improvement cycles. That is called science, the scientific method. Do we think science isn’t creative? Hah – perhaps it often isn’t, but it should be!

So what…

What shall we make of this discussion of standardized work? Two motivations drove me to write a bit extensively about standardized work. First, SW, that most basic of building blocks for any lean system, remains woefully misunderstood, misapplied and often disregarded. I think one reason for it being neglected relates to my second motivation.

I want to emphasize that well-designed standardized work will recognize all the social factors that go into producing good quality in a repeatable way. Poor design of the work could easily have led to the mistake by the worker and the subsequent quality failure. The work design must produce the required output, as defined by the technical requirements, the specifications, and as specified by the engineering design of the product. That comes first. But, the work design must also include the "human factors" considerations that make it possible to do the job the right way, and even difficult to do it the wrong way.

Which brings us back to the thesis that the technical/process side and the socio/people sides of the equation are equally important. At the end of the day, you can’t really separate them.

Look at your standardized work and structured improvement process (kaizen) - that is where you will find your culture!

john

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

So, how is your standardized work (SW) implementation going?

Responses to that usually paint an ugly picture. Here’s what I frequently hear:

“We just don’t have the discipline Toyota has to make SW work.”

“We put it in place but the people don’t follow it.”

“We have trouble transferring good SW from worksite to another.”

“We are good at determining the One Best Way, but people always insist on doing it their way.”

“People just don’t want to follow it. They like to do their own thing.”

“We put in an audit process, but the auditors don’t follow the audit process.”

I like to say that the Toyota Way is a socio-technical system on steroids. A test for all our lean systems is the question of how well we integrate people with process (the social with the technical). Nowhere does that come together more than in the form of standardized work and kaizen.

By that I’m saying much more than just pointing out that our corporate lean initiatives should involve both Engineering and Human Resources departments, each initiating programs to elevate the technical and the social dimensions of work. I am talking about the way work design embodies both dimensions at the micro level at the same time. When a worker bolts in the seat belt in the factory or an office staffer processes a requisition in the office, the work will be driven by both the technical and social aspects of the job design.

Leaders, be warned: you cannot simply dictate this from on high. You are in trouble as soon as you find yourself chasing compliance in pursuit of standardized work. You are chasing your tail and you'll never catch it. Rather than controlling the details of compliance, examine why the worker is not or cannot follow the standardized work. Ask, "Why can't you follow the standardized work?" The answer to that question – asked not accusingly but in a spirit of pure inquiry – will invariably lead you to unexpected places, usually quite far from the employee.

I'm going to go through five neglected or misunderstood or forgotten aspects of standardized work. Then, we'll explore how to think about standardized work for non-standard work, things like service industries, knowledge workers, creative work, and management. Finally, I'll provide a kind of "outline" that might help as a guide for you to think about establishing standardized work in your organization, centered around these five neglected aspects of standardized work:

1. Don't confuse standardized work with work standards.


2. Don't confuse standardization with commonization.


3. Don't try to impose standardized work without also providing a structured improvement process, a clearly defined, unambiguous means of making improvements (kaizen).


4. Practice, practice, practice...


5. Don't forget the critical role of the leader/manager.

Five Neglected Aspects of Standardized Work

• Don't confuse standardized work with work standards.

As a practical matter of getting started with standardized work, you have to first clarify your work standards. Never confuse work standards with standardized work. Other terminology often used for "work standards" include quality standards, specifications, engineering specifications, or quality specifications.

Work standards are established during product and process development. They comprise the work that must be accomplished for the product to be produced in a way that successfully achieves the design intent of the product or service. Changes in the work standards requires review of the engineering design, so manufacturing companies usually have some kind of "Engineering Change Request" process in place (and, by the way, it's also a process that is often full of problems and waste and a good process to choose for one of your first efforts at business process kaizen). As part of standardized work, Toyota usually calls them out as “Quality Standards.”

Some examples include:

• Assembly - apply xx pounds of torque


• Processing - heat treat at xxx degrees for x hours


• Healthcare - provide xx medication at xx dose


• Coffee - xx seconds for an espresso shot


• Journalism - a weekly column of xxx words

For each of the above, kaizen (improvement) is also possible, but through a different process than the typically incremental improvements of standardized work and a suggestion system.

Those are work standards.

Toyota-style standardized work for the front-line production operator is a matter of three basic elements: (1) timing, (2) sequence, and (3) a standard amount of stuff that is in process at any given time.

a. Takt time and cycle time (TT vs. C/T)

- In other words, timing - the timing demanded by the customer and the timing constraints of processing capability

b. Sequence (including layout and man-machine combination with process capacity sheets and SW combination table)

- In other words, determining the optimum sequence of producing the product or service – first do A then B then C

c. S-WIP

- In other words, the amount of in-process "stuff" that is required, no more, no less. That stuff may be material, parts, information.

With those standards established, the operator has the basic elements to make it possible (with training, practice, and support) to complete his or her work successfully. From there, he can easily learn to identify problems. And from there – with proper training and support – she can solve problems and make improvements. With the standardized work in place, now the operator can do PDCA.

Toyota's "Mr. Standardized Work," Mr. Isao Kato, has hammered this point for many years: "Before you can begin with standardized work, you must clarify your work standards." Too often, this edict has fallen on deaf or not-ready-to-listen ears. This distinction is fully institutionalized in Toyota production operations, so Toyota operations people hardly even need to concern themselves with it. At your company, you will probably need to do a lot of detailed work to make the distinctions clear and you may need to add "required output" to the list for a fourth basic element.

2. Don't confuse standardization with commonization.

Standardization means a given operation has established a standard practice, a routine that can be followed, a baseline of comparison for the human doing the work to use to discern normal from abnormal. With that baseline, a foundation for PDCA is established, making improvement possible.

Commonization, on the other hand, means simply that a given operation is done the same way everywhere. This is where concern with "best practice" and seeking "one best way" comes in. Toyota refers to it as yokoten. For example, an assembly job that entails bolting in a seat belt or the process for communicating a scheduling change in a dentist office – commonization is doing those jobs exactly the same in every location by every worker. (See "Teachable Moment" column.)

Our aim with standardized work is the former, establishment of a baseline of operation from which improvement is possible. There are of course many occasions when commonization is also desirable. But, the real prize here is when we can get each person to follow his or her own SW so that every time they do the job they do it in the same way, establishing a baseline that can then be observed for correctness, abnormalities easily identified, and improvements readily generated.

As a leader, if you can achieve this in all your operations, you should be very happy. Then, you may wish to also pursue commonization as needed. But, my wager is that once you have each worker engaged in pursuing improvements in his or her own SW, you will find your dissatisfaction that different workers may do similar jobs a little differently to be much less of a concern.

Many companies allow this concern to become an excuse to not turn their employees loose with kaizen, to not charge them with making suggestions to improve their own work. Such managers choose instead to worry about keeping track of and communicating "best practice."

My bet is that if you do unleash the creativity of your people, you will quickly stop worrying about the fact that worker A in plant B may perform the operation a little less efficiently than worker B in plant A.

• Don't try to impose standardized work without also providing a structured improvement process, a clearly defined, unambiguous means of making improvements (kaizen).

You will have none or limited success with standardized work unless you also institute some kind of suggestion system, or process (whether or not labeled formally as a “suggestion system”) that gives individuals doing the standardized work a way to make suggestions in how to improve the work – AKA kaizen. The essence of kaizen comes down to the people who do the work making suggestions in how to improve it. In other words,

• You can't do standardized work without kaizen.


• And you can’t do kaizen without standardized work.

What is standardized work? What is kaizen?

They are two sides of the same coin - if you try to have one without the other, you will encounter one of two types of very serious problems. To explain and explore:

1. Standardized work without kaizen

• Employee motivation is killed, human creativity wasted


• Problems repeat, unidentified, unsolved, unabated


• Employees don’t take initiative, improvement stops
  

  
  

  Operations – like economies, like companies, like cultures, like species – either progress or decline.
  

B. Kaizen without standardized work

• Chaotic change, the saw-tooth effect of progress and regress


• Problems repeat, PDCA not followed, no root cause analysis


• Progress impossible to identify, Improvement stops
  

  
  

  Kaizen – as an expression of the scientific method - requires a baseline of comparison.

Which brings us back again to the thesis I've been hammering in this space for months, that the technical/process side and the socio/people sides of the equation are equally important. Separate them and expect to find trouble.

That's the first column of three on Five Missing Pieces in Your Standardized Work. Stay tuned.

john

John Shook, Senior Advisor

Lean Enterprise Institute, Inc.

I received a lot of questions on-line and off about last week's column on the pending closing of NUMMI. One question in particular came up a lot: "What did you really do to change the culture at NUMMI so dramatically so quickly?" It's one thing to say at a high level, "We instituted the Toyota production and management systems." It's another to describe more specifically what we actually did that resulted in such a turnaround of the culture.

I'll dive into that deeper topic this week in my usual way - describing what I learned and how I learned it. (By the way, that's why I usually write these columns in the first person. We all have unconscious biases in how we perceive and report. Writing in first person helps you, the reader, to see and judge my biases for yourself. Thanks, Mike, for reminding me to point that out. Furthermore, I always try to make it obvious when I am providing facts versus interpretation or opinion.) And to do justice to this important topic, this column is much longer than your typical web log. So, consider yourself warned.

I worked for Toyota, not NUMMI or GM, and was based at Toyota's headquarters in Toyota City, working with NUMMI and GM people when they visited Japan, while visiting NUMMI itself periodically.

Takaoka Plant outline, circa 1984. It has produced the Corolla since opening in 1967.

As it was for many others, NUMMI was an incredible learning opportunity for me personally. Before I could help Toyota teach GM or anyone else, they had to teach me first. So, starting in late 1983, Toyota put me to work at the headquarters and at the Takaoka Plant (shown above, as it was in 1984), NUMMI's "mother plant" that produced the Corolla. I worked on all the major processes of a car assembly plant (as illustrated in the simple graphic below, which they used to orient me to what I was about to experience). Then, working with Japanese colleagues, I helped develop a training program to introduce the Toyota system to the American employees of NUMMI.

Production flow of Takaoka Plant, circa 1984. Takaoka has often been called the most efficient auto assembly plant in the world.

To recap briefly from last week, GM was looking for a few very tangible business objectives with NUMMI. It didn’t know how to make a small car profitably. NUMMI was also a chance to put an idle plant and workforce back to work. And, of perhaps lesser importance at the time, but still real, they had heard a little of Toyota's production system (Len Ricard and a few others had looked closely at Isuzu, which had learned from Toyota). This would be a chance to see it up close and personal, a chance to learn.

On the other side of the fence, Toyota faced pressure to produce vehicles in the U.S. It was late bringing production to the U.S. Honda and Nissan were already building cars in Ohio and Tennessee, respectively. They could have just chosen to go it alone, which would have been quicker and simpler. But Toyota’s aim was to learn, and to learn quickly. What better way than to get started with an existing plant, and with partners helping them navigate unfamiliar waters?

The NUMMI Learning Opportunity for Toyota
At the time, the workforce in the old GM Fremont Plant was considered to be an extraordinarily "bad" one. Many considered it to be GM’s worst. The workforce in those days had a horrible reputation, frequently going out on strike - even wildcat strikes - filing grievance after grievance, and even sabotaging quality. Absenteeism routinely ran over 20%. And, oh yes, the plant had produced some of the worst quality in the GM system. And remember, this was the early 1980s. So to be the worst in GM's system at that time meant you were very, very bad indeed.

So, Toyota had many concerns about transplanting perhaps the most important aspect of its production system - its way of cultivating employee involvement—in getting started. How could workers with such a bad reputation support us in building in quality? How would they support the concept and practice of teamwork?

As it turned out, the "militant" workforce was not a major obstacle. Many problems did crop up, but they were ultimately overcome. In fact, the union and workers didn't just accept Toyota's system, they embraced it with passion. We took the quality of the plant from GM's very worst to GM’s very best - not just bad to good, from worst to best - in only one year. The exact same workers, including the old troublemakers. The only thing that changed was the system. The production and management system.

The Workforce
About 85% of NUMMI's workers at start-up were UAW members from the old GM Fremont plant. Another 5% or 10% were from a Ford facility from just down the road in Milpitas that had also closed. A myth about NUMMI over the years has been that the old troublemakers from the GM days were weeded out. Even within GM, it is commonly believed that NUMMI's new employee assessment process filtered out the radicals who had caused so much trouble in the old days. Not true. The old troublemakers, previous strike leaders, were still there. But, they weren't troublemakers anymore. That absenteeism that regularly reached 20% or more? Immediately reduced to a steady 2%.

And check out this article from summer of 1985. The significant thing about it is the publication it appeared in - "Solidarity."

Excuses, Excuses
From the beginning there have been those who try to explain away NUMMI's success with excuses. "Well, the plant had been shut down and the workforce laid off, so of course they were motivated ..." "NUMMI developed an elaborate assessment process that weeded out all the troublemakers. Only docile 'team players' were hired back."

But, if being brought back to work after having been laid off is sufficient for successful turnaround, successful turnarounds must be happening every day. And, factually, it simply isn’t true that the old troublemakers were weeded out.

Others try to explain the early failure of GM to implement TPS to Toyota's failure to bring over the best and latest technology of TPS. Toyota kept the best stuff - the secret sauce - behind locked doors."

Well, I was inside the rooms when the doors were locked. And I can assure you that nothing was held back.

So, What Is Culture and How Did We Change It at NUMMI?
Once observers accept that idea that NUMMI was, no excuses, caveats, or qualifiers, a successful transformation, the question comes: "Okay, so, how did you change the culture? What did you do that changed such a troublesome workforce into an excellent one?"

It's a great question.

It's one thing to say the culture changed because we put in the TPS or changed the managers or management system, but it's another to define exactly what really changed the culture.

The individual who put the concept of "corporate culture" on our collective radar screen was Professor Edgar Schein of MIT. And, interestingly, there is no one who is more skeptical than Schein about claims of easily making wholesale changes in corporate cultures. While Schein teaches that culture is hugely important, he also argues that you don't change the culture by trying to directly change the culture.

I've long used a pyramid that I later found out was almost the same as Schein's model. Trying to capture what I had learned of how the culture was changed at NUMMI, I developed this simple model:

The typical western approach to organizational change is to start at the bottom, change the culture by trying to get everyone to think the right way, so their values and attitudes will change and they will naturally start to do the right things. That's represented by the left side arrow, running bottom to top.

What I learned was most powerful at NUMMI was to start with the behaviors, with what we do. Define the things we want to do, the ways we want to behave and want each other to behave, provide training, and then do what is necessary to reinforce those behaviors. The culture will change as a result. That's the right side arrow, running top to bottom.

This is what is meant by, "It's easier to act your way to a new way of thinking than to think your way to a new way of acting."

Jose Ferro of the Lean Institute Brasil had studied with Schein as a grad student at MIT and, seeing my pyramid, said I had it slightly wrong. The entire pyramid is the culture; the base is your basic assumptions of how the world works. That made sense to me. It was only then that I learned that these ideas had been fully articulated by Schein long ago. (That was just one of the many times I have thought I had a bright new idea only to find out someone smarter had thought of it long ago.)

So Schein’s pyramid would look like this:

Schein himself describes culture as, "The pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems."

Maybe this definition from the Chambers dictionary is easier, "Culture: the state of being cultivated."

So, the question now becomes: how is it that we changed the culture at NUMMI by changing the behavior?

The best example of how the culture was changed at NUMMI - there are others - is the famous stop-the-line andon system on the assembly line. (I'll describe in detail in an upcoming column how my team leader would help me whenever I had problems completing my standardized work on the assembly line at Toyota's Takaoka Plant in Japan.) All of the GM and NUMMI people who underwent training in Japan experienced learning and working with the stop-the-line system (or some variation of it). One of the decisions to be made in establishing production at the joint venture was whether or not to install the stop-the-line system. For Toyota, of course, that was no decision at all - it was a given. The andon system epitomizes Toyota's focus, belief, investment, commitment to developing means to support employees in working in harmony with equipment and processes to build in quality.

The history of Toyota's andon goes back to the group founder Sakichi Toyoda. Mostly through reengineering ideas he found from textile companies in the U.K. and the U.S., he developed an automatic loom that would stop itself whenever a thread would break. Moreover, he developed an auto shuttle change device that not only would change the shuttle on the fly (without stopping the loom, the most unique innovation on his loom - the other pieces existed in one form or another on other looms) it possessed a simple sensor that would detect that the thread was about to run out, and then change the shuttle before it ran out.

Further, he devised a simple andon apparatus that would pop up to notify the worker whenever a loom stopped for some reason. The combination of innovations enabled a single worker to monitor several dozen looms, resulting in a tremendous boost in productivity AND quality. And, critically, it established a way of people and machines to work together in a kind of "harmony," with machines doing what they do best, supporting people to do what they do best (think) while building quality in at the source.

To this day, the principle and practice embodied in Sakichi's old loom forms one of the pillars of Toyota's way of working. (Andon and stop-the-line are elements of one of the two pillars of the Toyota Production System - jidoka. For more on jidoka (and there is much more), refer to Chapter Three of Kaizen Express.

A cornerstone of Respect for People is the conviction that all employees have the right to be successful every time they do their job. Part of doing their job is finding problems and making improvements. If we as management want people to be successful, to find problems, and make improvements, we have the obligation to provide the means to do so.

But, some of our GM colleagues questioned the wisdom of trying to install andon at NUMMI. "You intend to give these workers the right to stop the line?" they asked. Toyota’s answer: "No, we intend to give them the obligation to stop whenever they find a problem."

With standardized work, each worker on the assembly line knows precisely what his or her job is. He or she is given the knowledge and skills to know when he has encountered a problem (an abnormality that prevents him from successfully completing his SW), to know what to do when he's found such a problem, and knows exactly what will happen when he notifies. His or her team leader will come to provide assistance within his job cycle.

An early assembly plant andon board (from Toyota do Brasil). Each number represents an area along the assembly line. When a worker pulls a rope that is located directly overhead, the appropriate number will light up, signaling the team leader that one of his workers has experienced a problem. Note: the line doesn’t actually stop right away, only after it reaches a certain point (called a “fixed position”) will the line stop and only after the Team Leader has made the decision to let it stop.

That translates into a promise from management to the workforce. "Whenever you have a problem completing your standardized work, your team leader will come to your aid within your job cycle." That's quite a promise to a workforce of a couple thousand workers whose job cycle is in the neighborhood of one minute. But, Toyota learned that that is what it takes to enable workers to build in quality and to be engaged in problem-solving and making improvements.

How the NUMMI Way Was Different from the Old Way
That is what changed NUMMI's culture. Given the opportunity - and challenge - to build in quality, the new-old NUMMI workforce could not have been more enthusiastic about the opportunity to show that they could build quality and well as any workforce in the world. Quality, support, ownership - these things were integrated within the design of each job.

Contrast that with my first experience observing work on a Big Three assembly line.

In early 1995 at an assembly plant on the outskirts of Detroit, I observed a worker make a major mistake. A regular automated process was down for the day so the worker was making do with a work-around. And with the work-around, he managed to attach the wrong part on a car. He quickly realized his mistake, but by then the car had already moved on, out of his work station. Then I saw an amazing thing.

There was nothing that the worker could easily do to correct his mistake! Scratch the word "easily" from that. There was NOTHING he could do. Far from the NUMMI/Toyota process of making it: (1) difficult to make a mistake to begin with, easy to do the job properly, (2) easy to identify a problem, to see when a mistake or other problem occurs, (3) easy and in the normal course of doing the work to notify his supervisor of the mistake/problem, and (4) comfortable with the knowledge of what would happen next, which is that the supervisor would quickly determine what to do about it.

But for the worker on the Big Three assembly line there was, practically speaking, NOTHING the worker could do about the mistake he had just made. No rope to pull. No team leader nearby to call. A red button was located about 30 paces away. He could walk over and push that button, which would immediately shut down the entire line. He would then indeed have a supervisor come to "help" him. But, he probably wouldn't like the "help" he would get.

So, he did nothing. To this day, no one knows what happened there except that worker and me. (A good alternative would be to simply tag the vehicle with the problem, so it could be addressed later. Either that alternative wasn't available to him or he didn't know about it or he chose to not to exercise it.) But, the contrast with the NUMMI/Toyota process couldn’t have been more dramatic.

So, what changed the culture at NUMMI wasn’t abstract notions of "employee involvement" or "learning organization" or even "culture" at all. What changed the culture was giving employees the means by which they could successfully do their jobs. By communicating clearly what their jobs were and providing the training and tools to enable them to perform them successfully. The challenge to build in quality combined with provision of the enablers to successfully do so transformed the new-old NUMMI workforce from the worst to the best. The transformed workforce couldn't wait to show the world that they could build quality as well as anyone.

The stop-the-line andon process is just one example but it is a good one for two reasons. First, it concerns directly with how people do their work RIGHT NOW. For each of us, every day, every moment, work comes at us. How are we equipped to respond? The andon system isn’t just a set of manuals and principles or training - it is how the work is done.

Secondly, on a practical level, the most important and difficult "cultural shift" that has to occur in a lean transformation revolves around the entire concept of problems. What is our attitude toward them? How do we think about them? What we do when we find them? What we do when someone finds one and exposes it? The andon process (and the entire pillar of jidoka) concerns building in quality through exposing problems. Sometimes those problems are of our own making. That can be a very personal and threatening matter.

No Problem is Problem
Every person in a supervisory capacity, including hourly team leaders, visited Toyota City for two or more weeks of training at Takaoka plant. The training included long hours of lectures but most importantly practical on-the-job training in which they worked alongside their counterparts to learn what was to be their job back in California. At the end of each training tour, we asked the trainees what they would most want to take back with them to Fremont of all they had seen at Toyota. Their answer was invariably the same: "The ability to focus on solving problems without pointing fingers and looking to place the blame on someone. Here it’s 'five whys.' Back home, we're used to the 'five whos'." Call attention to the problem to solve it, or to the behavior to change it, but not to the individual for being just "wrong." (That's not to say the Takaoka trainers weren't hard on problems. They were. And if problems repeat or the same individual repeats the same mistake, individuals would be called out -loud and clear.)

"Problems" were indeed viewed completely differently. Americans like to respond "no problem" when asked how things are going. One phrase known and used with gusto by every early member of NUMMI was the Japanese word for "no problem," which, when spoken with a typical American accent, sounded pretty much like "Monday night." So when Japanese trainers tried to ask how certain problems were being handled, American NUMMI employees could be heard all over the plant cheerily shouting, "Monday night!" The response to this by the Japanese was, "No problem is problem." There are always problems, or issues that require some kind of "countermeasure," or better ways to accomplish a given task. And seeing those problems is the crux of the job of the manager.

The first case I know of a Toyota manager issuing the now-famous Japanese English edict of "No problem is problem!" was Mr. Uchikawa (who I also mentioned last week). As general manager of Production Control—arguably Toyota's area of most unique operational expertise - Mr. Uchikawa had a team of six very smart, mid-level GM managers working for him. Being very smart, young GM managers, they had a ready response whenever Mr. Uchikawa would ask them to report on how things were proceeding - "No problem!" The last thing they wanted was their boss sticking his nose into their problems. Finally Mr. Uchikawa exploded, "No Problem is problem! Managers' job is to see problems!"

The famous tools of the Toyota Production System are all designed around making it easy to see problems, easy to solve problems, to make it easy to learn from mistakes. Making it easy to learn from mistakes means changing our attitude toward them. THAT is the lean cultural shift.

But, Questions Remain
But, there are in fact some unanswered questions that remain despite NUMMI's success. Questions about how a company, your company, could actually do this.

NUMMI was a mixed brownfield-greenfield venture. It occupied old buildings with an old workforce, but NUMMI was truly reborn, with a new name (the name "NUMMI" for New United Motor Manufacturing, Inc. was supposed to sound cutely like "New Me"), bosses, operating system, and character. But, what happens when you enter into an ongoing operation that has its own ways of doing things, entrenched traditions, and perhaps unstable, even chaotic environment?

Training - everyone who supervised anyone at the start-up began their career at NUMMI with an experience in Toyota City, shadowing a mentor, seeing first-hand how Toyota does it, soaking up the culture, and learning their job, their role. In the first couple of years, about 600 NUMMI individuals - anyone who supervised anyone - visited Japan for at least two weeks of intensive training.

This photo is of the first group of production supervisors (Group and Team Leaders) to visit Toyota in Japan for two weeks of intense training in June 1984.

That was combined with around 400 three-month tours from Toyota trainers from Japan who would work side-by-side with their counterparts at NUMMI. That's a huge investment that few think they can afford. Is it possible to have success without THAT much investment? And what if you don't happen to have (as NUMMI did) access to a plant that was a model of lean production to learn from?

Toyota's Team Leaders organized themselves informally in something they called the Job Leader Society (Hanchokai). The arrival of trainees from NUMMI was as big a cultural event for the workforce of Takaoka Plant (and eventually all of Toyota) as it was for the people of NUMMI.

Product and process - all the physicals. Truth of the matter is, there was a world of difference between assembling an Olds Ciera and a Corolla. Compared to the products, the plant workers had been used to, the Chevy Nova practically assembled itself. Add the Toyota engineered processes, layouts and job routines, and a dramatic improvement in performance was virtually assured.

Management. I always point out, as I did above, that NUMMI's workforce was the same workforce that had been there before. That is true. What I sometimes don't have time to add is that, true the workers were the same, but the managers ... all the managers were new. They may have been from GM, from Toyota or hired from the outside, but they were new to NUMMI.

And it's the management process that really makes all those nicely engineered product and process designs really rock and roll.

The Management Question
If we look at GM's continued struggles as well as some of Toyota’s more recent struggles, we have to recognize that there are many questions about management that remain unanswered.

I left Toyota in 1994. At that time, GM still had not learned to make a small car profitably. And they still had not "learned" the Toyota production system. Many GM individuals had learned the TPS quite well, but GM as an institution still didn't know what to do with it. It would be the late '90s before they started making headway.

The first GM people who went back were quickly swallowed up by the GM system. They knew they needed to be placed together, as a group, to have an impact, but for the most part they were scattered around. But GM kept sending people and people kept learning. By the late '80s, NUMMI grads had created a GM version of Toyota’s system - they called it Synchronous Production - and were providing training to people in large numbers. In the '90s, GM decided to get serious and put the full system in place. Deciding it was too difficult to make progress in the U.S., they went first to Europe, then to Latin America, and, after they felt they really knew what they were doing, finally here in the U.S. Today GM has plants that arguably are on a rough par with Toyota in terms of both quality and productivity. World class.

Stepping back, it took GM close to 20 years to make serious visible progress with its lean learning (that's just me talking - my GM friends may differ with that assessment, but it certainly took at least 10 or 15 years). Maybe that's about how long it takes. A lot of the progress was made possible by sheer attrition and critical mass. As more and more people learned at NUMMI while more and more old timers retired, eventually the tables turned. A tipping point.

There are still serious questions about GM's success in fully absorbing all of the lessons of NUMMI. The first of those revolves around people and management. Are people engaged, at all levels, in exposing problems and making improvements? Are managers engaged in developing subordinates and encouraging ideas from them? Are the new, world-class GM plants continuing improving and adapting or just running them in accordance with their nice new design? There is no steady state, so things are either improving or declining. Which is it? How GM is embracing the people side of lean holds the key to how these questions will be answered.

The second revolves around another aspect of the role of management, setting and managing to a vision or sense of purpose that can guide the organization for the longer term. Deming called it constancy of purpose. Its opposite is the ruination of all change efforts, POM, program of the month. Can there be any doubt that keeping both eyes on Wall Street's 90 day evaluations -90 day evaluations for an industry that runs on rhythms of more like four years - is one reason for Detroit's decline? And it is no coincidence that most of Detroit's - and almost ALL of GM's - CEOs have been finance people. You can't run a global auto company based on short-term Return on Investment calculations. I have the highest hopes for the future of the New GM, but I must say it was a disappointment when every single person Obama appointed to the Auto Task Force was a finance person who knew nothing about the auto industry. And now, GM's new chairman is a telephone guy? His first observations as reported in the press could have come verbatim out of Roger Smith's playbook from the early '80s. He's seen the problem: GM needs "strong product-line managers." Good luck New GM.

Purpose, Process, People
In a column last December, "Survive to Make Money or Make Money to Survive?" I used LEI's Purpose, Process, and People framework to examine GM's learning from NUMMI. Contrary to popular opinion, GM learned a LOT from NUMMI/Toyota about process, with success in that regard that is far more than most observers realize. Their plants are now world-class in quality and productivity. But, I'll suggest that GM never got far enough into the people part. Remember the sight last year in Washington of the chairman of the UAW sitting side-by-side with CEOs of the Detroit Three? Too bad they didn't try working closely together like that many, many years ago.

Perhaps most importantly, could it be that GM's sense of its very purpose has been utterly different from Toyota's? The question of "What are we here for?" is an important one for an organization, and one that receives remarkably inadequate attention. I suggest that the difference in purpose between GM and Toyota can be summed up simply: Are we here to survive to make money or make money to survive?

Both Toyota and GM want to make money. Of course. And both want to survive. But, the distinction between a corporate purpose of survive to make money versus make money to survive is a difference that makes a big difference. And, if learning is the right measuring stick to judge the impact of NUMMI, it just may be that purpose isn’t really something you simply learn.

js

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

By now you know that Toyota made its much-anticipated decision to close NUMMI. Many of my friends are saddened by the turn of events. While I am also sad, I’m also okay with the decision. All good things come to an end, and if NUMMI was to ever cease operations, now is a good time.

My work with NUMMI was the greatest experience of my professional career. My learning curve was so steep I couldn't see to the next step, let alone the top of the stairs. I remember thinking, literally, "If someone came along and made me rich with a big, fat check, I would still do exactly what I’m doing now." And what I was doing then was working incredible hours and, if not loving every minute of it (it had its less than pleasant aspects as well), appreciating every moment.

So, a question I've heard a lot recently: was NUMMI a success? Rather than simply reply with a simple yes or no, let me share my own experience there.

Toyota hired me in late 1983 to work on the Toyota side of its new venture with GM. I was assigned to a newly formed group at the company's Toyota City headquarters to develop and deliver training programs to support its looming overseas expansion.

All this was just happening. NUMMI didn't even have a name yet. The agreement with the UAW was yet to be signed. (One of the first meetings I attended was an explanation of the just-signed Letter of Intent. I was relieved they didn't ask me to translate - the content of the presentation by the US attorney was far too technical for the level of my Japanese language at the time. The final agreement wasn't ratified until summer of 1985.) There weren't yet any employees of NUMMI, not even management. NUMMI wasn’t successful, it wasn't famous - it was just a dream.

Partner GM

GM had several very clear business objectives. They had an idle plant (the Fremont plant had made several products over the years, Chevy Camaro, Olds Ciera, GMC trucks. But, no matter the product, quality was consistently GM's worst. Worst of the worst.) Not to mention an idle workforce, the fact of which was never helpful to the company's overall relations with the UAW.

More to the point of a venture with Toyota, GM didn't know how to make a small car profitably and partnering would give them a chance to see how Toyota does it. And it would give them a chance to see Toyota's production system. The Toyota Production System wasn’t famous yet, but there were people in GM who knew a little about it and wanted to know more.

What did Toyota want?

The specific objectives for Toyota were less tangible. But it was crystal clear that Toyota needed to manufacture cars in North America. Political pressure made it no longer tenable to simply ship cars around the world from the comfortable confines of Toyota City. And Toyota was trailing Honda and Nissan, each of who had already established operations in Ohio and Tennessee.

So Toyota needed to produce in the U.S. But why California, the most expensive place in the U.S. to manufacture (NUMMI paid about $13 per hour in the beginning, a little on the high side for the industry at that time)? Why with GM, still by far the largest car company in the world? And why with a UAW workforce??

Using an existing facility would obviously save time and money. And above all it would provide a cheap way to learn quickly.

That's what Toyota wanted most of all: to learn. GM had a clear set of business objectives above all. Toyota, on the other hand, had a different way of approaching this venture.

What exactly did they want to learn? Above all, Toyota faced two big unknowns when it came to operating outside Japan (even outside Toyota City): People and Suppliers.

Toyota had a lot of confidence in its system. Between 1950 and 1980, the company had evolved a way of working that was revolutionary. They were confident in their ability to physically put together all the mechanical pieces of producing an automobile. But the people and supplier parts were scary.

The Toyota Production System starts and ends with people building quality into the process. All the way back to Toyoda group founder Sakichi Toyoda's early 20th century automatic loom. Sakichi’s loom was brilliant in the way it combined automation with people. The automation was made to work FOR the people - not the other way around - in pursuit of better quality. Sakichi's system engaged workers minds as well as their hands in identifying and responding to problems, developing effective countermeasures to the root causes of problems on the spot. Quality wasn’t inspected in - it was built in.

And, secondly, Toyota's just-in-time system of achieving end-to-end material velocity depended on close working relationships with suppliers. NUMMI's suppliers would be expected to deliver with absolute reliability.

People and suppliers, those were the difficult questions and challenges -- how could they be answered quickly? Countermeasure: GM and the UAW as partners.

It is no secret that before approaching GM Toyota held discussions with Ford about the possibility of entering into joint production. Toyota had long held great admiration for Ford, admiration from the Toyoda family for the Ford family, and admiration by Toyota the company for Ford the company as well. But, Arab oil embargo concerns combined with a general lack of interest on the Ford side led the talks to quickly fizzle.

So, instead of Ford, GM was the easy second choice. GM is no big surprise, but what about the UAW?

It would be going too far to say that Toyota in the beginning actually wanted the UAW as a partner in the venture. But, once it became clear that the UAW was going to be in the picture, Toyota embraced them fully as a partner: "If we can make NUMMI a success with a UAW workforce in California, we can be successful anywhere."

On the supplier side, it is well-known that Toyota grew up with its own semi-captive set of keiretsu suppliers. Working with new suppliers was always a serious matter for Toyota, demanding great care. As NUMMI's first general manager of production control (and later president and chairman of Kanto Auto Body) Susumu Uchikawa said, "Without our suppliers, we can’t do anything." He was just acknowledging the truth. OEMs rely on suppliers for most of the components that go into the final product. With automobiles, everything, every component, is engineered for each vehicle. Totally integrated engineering. Close partnership with suppliers just makes good business sense. You can't produce with good quality and profitability if your suppliers are weak and going out of business. You don't get rich being a Toyota supplier, but neither do you go out of business!

GM as partner (Ford would have worked as well) could introduce their suppliers and show how they work together. Learning those lessons turned out to be a long, difficult process. But, NUMMI and GM's help was the beginning of Toyota's long journey in this critical learning process.

Learning the people side of things, especially how to work effectively with American front line production workers, proved a much faster course. While it wasn't easy, it was remarkably successful; Toyota, NUMMI, the UAW, and the entire workforce, achieved Toyota City levels of performance through attainment of an extraordinary degree of mutual trust. In terms of tangible performance, NUMMI didn't just improve; it went from GM's worst plant to its very best. That improvement was achieved in just one year, and with the same workforce.

The NUMMI Learning Ledger
I left Toyota's employ in 1994. Let’s look at the Ledger of Learning at that time, ten years into the joint venture:

Toyota

Learn about North American suppliers - check

Learn how to work with North American people - check

GM

Put an idle plant and workforce back to work - check

Add a high, quality small car to their lineup - check

Learn how to build small cars profitably - nope

Learn how to implement TPS - nope

In terms of specific, tangible results, GM had indeed benefited and arguably much more so than Toyota. The original product from NUMMI all went to GM in the form of the Chevrolet Nova. So, as planned, NUMMI enabled GM to add a nice small car to its line-up. A new model even formed the flagship product for a new brand (a sub-brand of Chevy, really), the Geo Prism in 1988.

Toyota on the other hand, initially received no product at all from NUMMI. A new hatchback version of the Corolla was added a couple of years after start-up, but quickly bombed in the marketplace (the Corolla FX - no penalty points if you don't remember it). Eventually, Corolla sedans and the small pick-up in 1991.

So that's the way the ledger looked in the mid-90s, half-way through the life of the JV. Note that the JV wasn't even supposed to last this long to begin with. Back in the beginning, Chrysler led a lawsuit to prevent NUMMI from even getting off the ground, claiming monopoly concerns. Here were the largest auto companies in the US and Japan teaming up on everybody else. The judgment handed down limited the life of the JV to 12 years, so NUMMI should have closed up shop in 1996. But, as the time approached, an appeal to the Court resulted in a ruling that allowed the JV to operate with no legal time limit.

As it turns out, legal time limit or no - the end is in sight.

If that was the Learning Ledger half-way through, what about now, 25 years in as the venture comes to an end?

Toyota got the basic learning it wanted very early on. Toyota's ongoing involvement as GM's JV partner at NUMMI has been a matter of loyalty as much as anything. Under ordinary circumstances, Toyota would never close an operation it had invested in. Toyota has a track record of proving time and again the lengths to which it will go to preserve jobs well past the apparent business need for them.

From the beginning, Toyota's objectives at NUMMI were defined by learning rather than the specific business tangible objective that typically define a joint venture. And if there's one thing Toyota knows how to do it is how to learn, especially where it's important down at the operational levels of the company - a characteristic that is the embodiment of the learning organization. Toyota's biggest strength is that it learned how to learn, and it was that approach to learning that defined its approach to NUMMI from day one.

For GM, on the other hand, it was only about half-way through the life of the JV that the deeper learning started to pay off. Jack Smith was on the negotiating team that created the agreement with Toyota. As chairman in the mid-90s, Smith is the one who finally put senior level shoulder into making something of the learning of the by then substantial number of mid-level managers who had gone to NUMMI to learn. With the edict to "run common, run lean," Smith authorized a team to execute the establishment of GMS - Global Manufacturing System - and to build a model lean factory where all the learnings of the previous ten or so years could be put together. They decided it would be easier to experiment far from the mothership in Detroit (and away from the UAW) so chose Eisenach in Germany. From there, plants in Brazil, China, finally back in the good old USA (even in the middle of Michigan and with the UAW!) incorporated the same principles, design, and ways of working.

GM's global initiative was successful because of the deep learning that had occurred among the ranks of people with NUMMI experience. In the 1980s, GM NUMMI grads recast the TPS they had learned at NUMMI into something they called "Synchronous Production" and began offering training to significant numbers of GM people. Meanwhile, back at NUMMI, GM turned its small liaison office - called TLO, or Technical Liaison Office - into a training operation that organized short and longer-term visits to NUMMI into true development opportunities for the GM folks who went through there.

It all finally paid off, by many objective standards and according to numerous third-party observers, GM’s new plants are world class, in quality and cost.

And, starting about five years ago, GM even began applying what it had learned of lean practice in the plants to work in the office. GM’s "Enterprise GMS" initiative saved a billion dollars in the first year of applying lean thinking to office processes.

But, by 20 years or so into the venture, GM seemed to have decided that it had really had enough of NUMMI. They recreated the training provided by the NUMMI TLO by offering the same experience in Michigan, eventually shutting down the training operation at the liaison office at NUMMI.

And, by the end, when other GM operations had improved so much, NUMMI no longer provided the dramatic impact on visitors it did back in the 80s, when visitors would leave slack-jawed at what they had seen. In fact, by the end, not only was NUMMI no longer GM's quality leader, NUMMI was actually a drag on GM's overall quality scores. That means: the quality of products manufactured at NUMMI was worse than GM’s average! Ouch. (Note: that is my understanding based on discussions with various people - I can’t verify it, but it sounds credible.)

So, why is NUMMI closing?

Clearly, the dollars and cents don’t add up for either Toyota or the new GM. Neither needs the capacity right now, and who’s to say if they will need it in the future.

But, also - more importantly - the learning is done. Fini. Caput.

Or so it seems.

But, I would argue that there is still a LOT more to learn. About technology transfer, the dissemination of learning, the MANAGEMENT system that underpins and enables the more famous Production System, the importance and attainment of mutual trust between labor and management, about how to sustain a powerful operating system over decades and decades.

NUMMI was a great story in its own right. A story of people coming together and doing something great at a time and place in history. And NUMMI was important to both GM and Toyota. I think it was important for the UAW, too.

But, a less considered fact is that NUMMI was hugely important to American manufacturing. NUMMI proved that the best, supposedly "Japanese," production methods in the world could work on American soil with American labor. An early motto at NUMMI was "Best of Both Worlds." I truly believe NUMMI in its heyday embodied that motto in principle and in practice. And, if lean production and lean thinking and the lean enterprise are the way forward for American organizations in all industries, NUMMI was the most important lens for the world outside Toyota to see it up close.

john

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

In July, just prior to the Major League All Star break, I introduced you to The Mental ABCs of Baseball. Now that the pennant races are heating up, this seems like a good time to introduce the other baseball book found in the bibliography of Managing to Learn, Ya Gotta Have Wa by Robert Whiting (Whiting, Robert, You Gotta Have Wa, New York: Vintage Books, 1990). Red Sox fans especially may find it insightful, with all the controversy surrounding Dice-K this year.

Whiting wrote two books about Japanese baseball. The other, The Chrysanthemum and the Bat is actually my favorite, and is one of my favorite books about Japan, but is very hard to find. You Gotta Have Wa was the basis of the Tom Selleck movie "Mr. Baseball" so will be much easier for you to locate. And the themes and even much of the content of the two books is essentially the same.

There are more books that try to describe, explain, analyze, interpret Japanese culture and society than there are even about lean. Most either oversimplify (and over-criticize or over-praise) or dive so deep into arcane social-cultural historical hair-splitting as to be inaccessible to all but the experts.

Whiting's two books, though, explain almost all of the intricate dynamics of Japanese society that you need to know to understand the cultural underpinnings that gave rise to the birth of the Toyota Production System in Mikawa Japan. But, Whiting explains it all through the lens of baseball, with funny and hard-to-believe anecdotes.

Baseball was transplanted from the U.S. to Japan during the period of mass cultural infusion of Japan's Meiji Era. This was when Japan (at gunpoint) ended its almost 300 year period of self-imposed isolation from the world. By the 1950s, baseball had become thoroughly "Japanized". Baseball in Japan looks the same on the surface as its American forerunner, but the differences are many and illuminating. You may note elements of the Japanization of baseball that represent the reverse situation we face in our challenge of adopting/adapting TPS for our American or other cultural environments.

Here are a few gems from the book:

"By the time Japanese professional baseball had celebrated its fiftieth anniversary, it had become a mirror of Japan's fabled virtues of hard work and harmony, and a game that was barely recognizable to Americans."

"This isn't baseball," grumbled former Dodger Reggie Smith after his first season as a Tokyo Giant. "It only looks like it."

"Training isn't just supportive of playing well in the game: 'Training is a religion'."

I invite you to read either of Whiting's books with an eye to, first, gain an insightful look into Japan and how things work there and, secondly, to ponder the reverse transplantation dynamics – perhaps you can find some hints to help with your own situation. Whiting's books are fun, insightful and often hilarious. No less an authority than David Halberstam agrees with me:

"Far more than a sports book - What you read is applicable to almost every other dimension of American-Japanese relations."

Whiting defines "Wa" as meaning "unity and team spirit". Usually it's translated in English as "Harmony". The original name of Japan the country (the name they gave themselves) was "Big Harmony". Possibly the best anthropological work on Japanese business was an ethnographic study of a bank, called "For Harmony and Strength", which author Thomas Rohlens borrowed from the banks motto. What's interesting is that, whether baseball or Rohlens' bank or Toyota, harmony isn't something that the group is born with, it's a desired state to be worked toward. If they were born they way, why would they have to train so hard to get there?

john

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

Occasionally I get asked about why I chose the various books listed in the bibliography of Managing To Learn. Basically, I used just two simple criteria: books that directly influenced the writing or thinking that went into MTL, or books that nicely expound upon some of the key concepts of MTL.

One of the books that some readers find curious to find cited, and apropos to the season, is The Mental ABC's of Pitching. Actually, there are two baseball books in the bibliography, the other being You Gotta Have Wa by Robert Whiting.

The Mental ABCs of Pitching by H. A. Dorfman is a wonderful, simple book that goes through the English alphabet presenting a key word for each letter. Dorfman writes about a wide range of practices and beliefs, ranging from Breathing to Goals to Mantra to Umpires. The book is simple but also unpredictable, in the sense that Dorfman can quote Chekov—“Man is what he believes”—when stressing the need for pitchers to understand what they think of themselves; and on the next page offer advice on how to regroup from giving up a Big Inning.

There are several entries that relate directly and beautifully to specific lean concepts. Be sure to read them all, but I’ll introduce just three here, starting with "A" - for "Adjustment."

Lean Thinking and Acting

As you know, much if not most, if not almost all of "lean" is essentially a matter of seeking in all that we do means of realizing P-D-C-A. Deming's elegant model is another of the many "deceptively simple" dynamics of lean thinking and acting. The "A" stands, of course, for "Act". Lately, many of us add the coloration of "adjust" to explain what happens in the "A' dimension of the cycle. The idea here is that, based on the trial (Do) that you put into play that is based on your hypothesis (Plan), you must have (should have, anyway) learned something – after all, nothing ever goes exactly according to plan. That, in fact, is an assumption of lean thinking, "no problem is problem!" So, based on your "Check" of the results of your trial, you will invariably need to make some adjustment. Following that adjustment should come standardization. With the new standard now in place, you begin the process all over again. And again.

Author Dorfman’s explanation of "A for Adjustment" is beautiful in its simplicity and powerful in its implications.

"To make an adjustment is to make a change, an adaptation. In the context of the baseball definition, it presumes a thoughtful, rational assessment of A) what the pitcher was trying to do, B) what went wrong, C) what he must do to fix it."

Here's another perfect lean fit from the ABCs of Pitching: Habits.

"The more a pitcher can develop routines, the more confidence he can have in his preparedness. He will feel a greater sense of control and focus. His routines are formed through choice and consistent expression of the behaviors he understands will serve him well. These routines are the focus of his attention and help him to 'stay in' good habits, so he does not have to concern himself with 'getting out' of bad ones. The habits are developed in relation to directed tasks."

And, finally, "Learning" in which he quotes no less a lean source than Henry Ford:

To those of you whose teams are struggling with their mid-season pitching, try sending a copy of The Mental ABCs to your team’s pitching coach: Dorfman, H.A., The Mental ABC's of Pitching; A Handbook for Performance Enhancement, Lanham: Diamond Communications, 2000.

Recently I suggested that GM's bankruptcy doesn’t necessarily mean all GM managers are bad managers. Now let me present another side of the argument.

I also recently suggested in this space and elsewhere that managers have two primary tasks: (1) get the people who work for them to take initiative to solve problems and improve their own work, and (2) align the work they do to provide value for customers and prosperity for the company. The manager gets this done by taking initiative to learn and improve, to build processes that enable improvement and problem solving, and to develop subordinates and others through mentoring.

Also, previously, I suggested that if we assess GM through the LEI lens of Purpose, Process & People, we would find that "GM learned—contrary to popular opinion—quite a lot from Toyota about process." But that wasn’t enough. For GM "never really got very far at all into the people part, and most importantly, all along its very purpose was utterly different."

GM managers have made great progress improving their processes over the past 10 or so years. Their failure to progress on the people front is clearly a failure of management. Does that make the managers who worked (or who still work) in that system "bad managers"? I have a hard time seeing it that way. It certainly means they made bad decisions, or failed to make many right or necessary decisions. I think GM's different purpose as an organization always gets in the way. And that different purpose always profoundly impacts the way it treats its people.

Let me give you an idea of the kind of thinking about people that has long differentiated Toyota from GM. I'll draw, as I often do, from my NUMMI experience.

Misdirected Suggestion System

Sometime around 1985, GM sent a lower-mid level manager to study the NUMMI/Toyota Suggestion System. Upon arrival, the researcher was excited and eager to learn about the famous Toyota process that had quickly gained traction at NUMMI. Six months later, he was despondent about his pending return to GM. "Why?" I asked. His simple explanation spoke volumes. He had received marching orders prior to his dispatch: "Do not return with a system design that does not deliver at least $20 per suggestion," he was instructed. "Why?" I asked again. "Because," he explained, "GM had done a simple ROI analysis that showed that it cost $20 to process a suggestion. So, naturally, a suggestion must save at least $20 in order to pay for itself."

By the end of his six months of study, the GM manager understood how horribly misdirected his marching orders had been. He had come to understand both the process and purpose of the NUMMI/Toyota Suggestion System. And he realized that the purpose and process are integrated elegantly with the people dimension.

He discovered a suggestion system that differed markedly from GM's, not to mention his own expectations. Conventional suggestion systems in the U.S. are designed to encourage BIG suggestions. They give big awards, are therefore reviewed by big committees, and – another "therefore" here – expect BIG results.

Our little suggestion system at Toyota, in stark contrast, offered very small rewards. In Japan, most rewards were between 500 and 2000 yen, or under $10 U.S. It was a very, very big deal to receive 3,000 yen. The emphasis was on making it easy to submit a suggestion and with a promise of quick, very quick feedback. Essentially immediate.

Let's say a worker has an idea for a better way to do a certain job. All he has to do is discuss it with his team leader (and with a team leader for about every five or six workers, the team leader isn't very hard to find), get agreement to try and then … try it. If it works, write it up and collect your 1000 yen. If it’s a good one, you might get 2000 yen. And then go to work thinking of your next idea, how to improve it a little more.

You've heard the numbers: 98% or so of suggestions are approved. The immediate, try-it-and-see, reflexive approach described above illustrates how that number is made possible. The entire process is so different from the typical suggestion system it’s hard to even think of them as the same animal. They are, in fact, not the same at all. Apples and oranges. Boys and girls (no, more different than that).

And in addition to the high acceptance rate, Toyota employees submit huge numbers of suggestions as well. It changes with geography (Japan versus USA versus Brasil, for example) and time (2009 versus 1984 versus 1969), but for the most part a typical production worker at Toyota submits about a suggestion per week. And did I mention that about 98% are implemented?

Here’s another of the distinguishing characteristics: the suggestions must (ordinarily) concern YOUR OWN work. No suggestions to improve the cafeteria menu please. We’re looking for ideas to change the process as you are working it.

Major Improvements

Consider also that the typical production worker's job may not consist of much more than a dozen or so major elements. So that means within a year or so the worker who has submitted the average 50 or so (note: I haven't checked the actual numbers lately) suggestions will have had the opportunity to make major changes in his job.

By the way, for young office staffers like myself, the target was for each person to submit one implemented suggestion per month. I really had a hard time with it. While the suggestion needed to be "about" my own work, it couldn’t be something that I was doing as part of, or in the normal course of, my work. So, if delivering a certain training course was part of my job responsibility, I would not write a suggestion for routine response to day-to-day occurrences such as, for example, some trainees' forgetting to bring their name tag back with them each day. On the other hand, if I came up with a poka-yoke, so that we collected the name tags each day before the trainees left the room, that would be a process (standard work) change that could qualify as a small suggestion (that one would be lucky to get even the smallest monetary award!).

Back to the disillusioned young GM manager. He knew, as he told me, that GM would never even understand much less approve such a system. But, he understood that the secret was that Toyota wasn't buying cost reduction ideas with its suggestion system, Toyota was buying the engagement of the workers.

Toyota got the idea for its suggestion system directly from Ford. In 1950, Eiji Toyoda spent six weeks learning from Ford in 1950, including important time spent at the River Rouge Plant. It was there that he saw Ford’s suggestion system and returned to Toyota with a pamphlet that explained it. Eiji knew that deep engagement in kaizen by his workforce in Toyota City was going to be key to achieving the major improvements he knew his company required. Upon his return to Japan, Eiji instituted Toyota's "Creative Ideas and Suggestion System' as a direct copy of the suggestion system he saw at Ford.

In Eiji’s words:

"The suggestion system is something that I saw at Ford and simply copied back home at Toyota. You start with a lot of curiosity, you put a system in place, and you let your people take it from there."

"I got a copy of the pamphlet that they were using at Ford, and we put that into Japanese to imitate the system at Toyota. But when I visited Ford later, they told me that they had stopped using the suggestion system; that it didn't work."

This is a copy of the first poster soliciting suggestions for the new program that Eiji copied from Ford, with the slogan, "Recruiting creative ideas!"

So, if the failure of managers to embrace the people side of lean is illustrative of the ultimate failure of old GM, it is ironic that the inspiration for Toyota's suggestion system – perhaps the most tangible illustration of how Toyota taps into the creative talents of its people – came from GM’s old backyard.

john

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

“The A3's potency as a management mechanism is one reason that it, and Shook's book, deserve greater attention. (The single-sheet-produces-rigorous-selectivity effect is only the most obvious of the ways that it does its work.) Another reason is that mechanisms in general are scandalously underutilized by managers. Mechanisms are about process. Great mechanisms are about process brilliantly understood. We still live in a management-by-objective world, even if we don't call it that anymore. Think MBO is dead? Just recall your last annual review, your last strategic plan, your last budget. Consider how many managers are given a "number" and told to hit it, how many organizations still function by intent and directive — increase sales, grow Web traffic, improve margin."

Links are below. You will probably need to register with Sloan Management Review, but it's free, easy, and quick.

I'm already finding the links useful in providing help to people who need a quick overview of the A3 process.

Toyota's Secret: The A3 Report
By John Shook
http://sloanreview.mit.edu/the-magazine/articles/2009/summer/50408/toyota%E2%80%99s-secret-the-a3-report/

Problem Solving By Design
By Michael S. Hopkins
http://sloanreview.mit.edu/the-magazine/articles/2009/summer/50401/problem-solving-by-design/

John

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

Picking up from last week, which was picking up from previous discussions ...

We had a couple of technical glitches in the middle of our "Forward to Fundamentals" webinar. A technician from the webinar company broke in to apologize. I made a quick joke about "... speaking of 'technical' problems ..." Hence the question, "Is your technical host a technical or social problem?"

Very good question, posed in yes-no or either-or fashion. The answer, of course, is "yes."

I've often remarked over the years about how problems that appear to be purely technical are found -- after a series of effective five why questions (it may take more like ten whys to get this far) -- to have a social root cause. Take Ohno’s famous "five whys" example (Toyota Production System, Productivity Press, p.17):

1. Why did the machine stop?

There was an overload and the fuse blew.

2. Why was there an overload?

The bearing was not sufficiently lubricated.

The lubrication pump was not pumping sufficiently.

The shaft of the pump was worn and rattling.

There was no strainer attached and metal scrap got in.

But, if we've learned anything from the failure of many lean initiatives -- whether at the macro or micro level -- it is that the technical solution is necessary but not sufficient. Behind the technical problem there is almost always a social problem and accompanying our technical solution we have to give equal consideration to the social solution.

Why was no strainer attached?

Maybe the standard work for the maintenance worker or machine operator didn't go far enough. Or maybe the standard work did specify changing the strainer but the worker failed to observe the standard. How was the standard developed, how was it communicated and trained? How easy was it to "forget" to change the strainer?

Another why might reveal, for example, that there was confusion between Jack and Jill as to who was supposed to make sure the darned machine was sufficiently lubricated. A social root to an apparent technical problem. I’ve seen it and I’ll bet you’ve seen it happen amongst engineers time and time again.

Which brings us back to the question about the technical problem that occurred during the webinar and the explanation/apology by the technician. I forget now exactly what happened. I think it appeared that we lost sound and slides wouldn't advance for a few moments. The problem cleared itself up in a matter of seconds (although it felt much longer knowing that a couple thousand people were listening in). A few seconds later the technician broke in to state that we had experienced a technical problem.

If a pilot or co-pilot fails to complete his checklist prior to a flight, and an electro-mechanical failure occurs with one of the items he missed, is that a technical problem or a social problem?

If a worker fails to adhere to standardized work, resulting in a quality problem for a subsequent process, is that a technical problem or a social problem?

You could answer that it depends on the final why of a five-why chain. You could also answer that it is both a social and a technical problem. There was a problem in the design of the work that allowed the purely technical problem (lost signal?) to get through.

Well-designed standardized work will recognize all the social factors that go into producing good quality in a repeatable way. Poor design of the work could easily have led to the mistake by the worker and the subsequent quality failure. The work design must produce the required output, as defined by the technical requirements, the specifications, and as specified by the engineering design of the product. That comes first. But, the work design must also include the "human factors" considerations that make it possible to do the job the right way, and even difficult to do it the wrong way.

Which brings us back to the thesis that the technical/process side and the socio/people sides of the equation are equally important. At the end of the day, can you even separate them? Would you even want to try?

john

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

I’ve received a lot of questions about my recent argument for a balance of people and process. So, many questions that I thought you’d enjoy seeing some of the written ones.

Below are four insightful posts from readers. Following these four posts is a list of questions that came in during the Forward to Fundamentals webinar I did with Jim Womack. All relate to the process-people balance matter.

Thomas said ...

John,

An insightful post that leaves me with a question: If companies "always err to one side to the detriment of the other" -- have you found that companies erring to the social side fare better than those that err to the technical side, or vice versa?

John: That’s a fantastic question. And one that would make a great research question. My guess is that technical/process-focused companies might fare better in the shorter term and socio/people-focused companies would do better longer term. But, that’s just a hunch.

Hmm, to offer a counterpoint to my own hunch, your question prompted me to recall a heavily “socio/people focused” company that I happen to know well and which struggled mightily with its early lean efforts, about ten years ago. The company couldn’t do anything on the plant floor without the total consensus of the workforce, which had developed an incredible sense of entitlement, from decades of having been consulted with on every move by management. It was a non-union shop with a stronger workforce voice than any union company I’ve ever seen.

Well, the lean initiative lagged and lagged until finally the company began losing and losing market share to its competitors (which were having good success with their lean initiatives). Only well after the financial numbers worsened to the extent that layoffs finally occurred (tremendously traumatic to such a people-oriented company) did the company manage to start making headway in process (manufacturing, distribution, sales, design) improvements. I think the company now has a pretty good balance between its socio/people systems and its technical/process side. But, it had to almost go out of business for that balance to emerge – just in the nick of time.

T. Karn said ...

I would like to see a scoring system that can be used to determine how my company is balanced.

John: An interesting, probably useful, idea. I don’t exactly disagree, but see Greg’s comment below…

Mark said ...

I agree with your post (about Purpose, Process and People) but am still stymied by the “how to” in the need for balance. If nature abhors a vacuum and always re-balances itself, how do we get people to lean where it counts; “lean between the ears?” As an expat in China, I feel up against it maybe even more so than at home in the States. What can we learn from GM's NUMMI people failure?

John: Yes, the lessons there are huge. Therein lies the deepest lessons of NUMMI, lessons which are usually missed even by insightful observers. At NUMMI, we took what was arguably GM’s very worst workforce and turned it into GM’s (well, it wasn’t exactly “GM” anymore, it was NUMMI, but it was still UAW) best in less than a year. The number one key to that key piece of NUMMI’s overall success was the people-process balance. Hmm, I really should write that up more completely one day…

Greg Thompson said ...

I agree with T. Karn but in the interim, much like the Supreme Court said -- you'll know you have balance "when you see it." Your honest evaluation will tell you most of what the science will show, even if you don't have a "98% in balance" score to back it up.

John: Yes, I know this answer fails to satisfy many, but I agree with your view. Certainly a “balanced scorecard to measure balance” might help, but I think we can learn to see and smell this balance very easily and more deeply than a score would demonstrate. When we see people struggling with jobs, with machines, with software, with computer tools, with company regulations that just don’t make common sense -- we know things are out of balance. Steve Spear states it well, “there is no substitute for direct observation.” I’d rather put the effort and time into developing observation skills than scorecards. But, when we’re working at the broader enterprise levels, the scorecard could play a useful role.

Not only Steve Spear…

Yogi Berra, “You can observe a lot by watching…”

……..

And now, the webinar questions. At least half of the total number of questions related to this topic of people and process balance. I will respond directly to two. The first one below is an information point. The second captures succinctly the point everyone else was getting at, I think.

“I’ve been out of touch for awhile so this is the first reference I have seen to STS. When did you first draw this link with the lean approach?”

John: I drew the link a very long time ago. I think anyone with direct Toyota experience would feel the connection, where or not they ever heard of STS theory. It’s obvious once you think of it that way. Basically, “socio-technical” refers to the interrelatedness of social and technical aspects of an organization. For those of you who would like to explore socio-technical system theory further, just Google it and you can easily “waste another perfectly good evening” (to paraphrase the great sensei from the “Car Talk” radio program). But, for a succinct introduction to the concept within a lean organization context, please read Chapter Two of the excellent book of my good friends Jim Morgan and Jeff Liker, Toyota’s Product Development System” (Productivity Press, 2007). Jeff’s initial academic background involved STST and Jim’s deep research on lean PD makes the linkages clear, even if you have no background with it.

“I like the answer to the Social and Technical aspects on how they are joined, good answer that I understand now. I never looked at the social side when doing the technical side.”

“Can you provide an example of a place where you have seen an imbalance between Technical and Social dimensions?”

“What are the signs that a company is too focused on either the social or technical aspect of lean?”

“How is it possible to recognize the imbalance between the social and technical aspects?”

“Can you provide a couple of suggestions to achieve the balance between social and technical?”

“Tips for aligning the right people to process?”

“The "People" issue is basically an internal communication issue, isn't it?”

“In regards to gaining social and technical balance, how do you decide what to work on first? Will one gain you more than another?”

“Arguably social step required before technical step. What is the first social step? Is it a commitment from top manager at facility saying we, as a group, have to do something different?”

“What is the relationship between balancing the social and technical systems in the company with the current crisis?”

“You speak of management balancing process and people - on what basis should management do this?”

“If management needs to balance the socio and technical side what is the socio training put on first line supervisor?”

“Is mentoring part of technical or social part of balance?”

“How do metrics promote social engagement for continuous improvement?”

“I like the Kanban example. What about electronic kanban? There is no social part there, isn't it?”

“Is your technical host a technical or social problem?”

John: They are all insightful but I love that last question: “Is your technical host a technical or social problem?”

What do you think?

John

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

Here again are the socio-technical balance scales recast into the LEI language of People and Process.

Thanks to those of you who joined last week’s webinar. We had some great questions, only a few of which we dealt with during the limited webinar time. One specific request I’ve received is that I spend more time introducing the new LEI book Kaizen Express. If Kaizen Express is intended as an aid in the “forward to fundamentals” movement, just what kinds of things does it hold in store?

Fundamentals Redux
Kaizen Express is retro. I described it last week as “a throwback to an earlier era of lean discovery.” It has short chapters, each introducing a major lean process with a quick overview to place the concept in context, a concise summary of the process/tool/technique itself, concluding with a simple dialogue of how it might come up in practice on the plant floor.

Kaizen Express was originally published in Japan as a set of bilingual Toyota Production System (TPS) learning materials. The original scripts of Kaizen Express were placed serially in the Japanese monthly magazine “Kojo Kanri” (Factory Management, Nikkan Kogyo Shinbun-sha) from 2005 to 2007 and subsequently compiled in the book “Eigo de kaizen! Toyota Seisan Hoshiki—Kaizen Express” (same publisher) in Japan.

That Japanese publication of Kaizen Express, now in its second edition, was intended primarily as an aid to Japanese readers and to non-Japanese working at Japanese-affiliated factories around the globe. As English is the official language of most multinational companies, our hope was that Japanese and non-Japanese could use Kaizen Express to learn TPS together. That’s why Kaizen Express is a primer—covering the basics of TPS—but also comprehensive, covering most of the topics a production team might need to learn in its first year or two of implementing TPS.

It came as a pleasant surprise, after the publication of the Japanese edition, to receive requests for more “global” versions of Kaizen Express. Evidently, there isn’t really a similar global, comprehensive, primer for TPS—in any language. The first request came not from the USA but from Taiwan, where our good friend and deeply experienced TPS practitioner Joe Lee of Toyota Kuozui Taiwan has concurrently developed a version of Kaizen Express for readers of traditional Chinese in cooperation with the Corporate Synergy Development Center in Taipei. That version is English and Chinese. Since the design of Express is “modular” in nature, we expect future versions of Express in different language combinations, such as Japanese-Spanish or English-Italian.

Fundamental Thinking
I have received a lot of questions about my hope for a “best of both worlds” approach to emerge—an approach that combines the best of Japanese and non-Japanese methods of developing people and even lean transformation. There are clearly plusses and minuses of both approaches.

Kaizen Express introduces TPS and kaizen in somewhat of a typically “Japanese” way. It uses many visuals, with illustrations on each page. It offers pragmatic, action oriented things you can try right away. If you’ve ever studied karate, aikido, or most any Japanese or East Asian art form, you will see similarity immediately. “Learn the thinking through practicing the patterns.” That way the practices become habits and instincts. It’s reminiscent of these amazing words of Taiichi Ohno from Birth of Lean:

“Whether or not people recognize problems and go to work solving them is a matter of instinct. Once you’ve developed that instinct, you notice all sorts of things.”

Pretty interesting, isn’t it? “Instinct” as a skill to develop. It’s that kind of thinking that underlies the “philosophy” or approach of the materials in Kaizen Express.

Let me illustrate how the book seeks to introduce TPS in a method that is consistent with key lean principles. One of my favorite teaching materials from Kaizen Express addresses the topic of your beliefs about efficiency. This isn’t new, but two important reasons to draw attention to it are: (1) it’s another extremely important yet forgotten or ignored concept, and (2) for the first time, you can see several important related concepts on the same page. Presenting them together provides a more complete view of the broader topic of “efficiency,” a subject to which Toyota people have always given great thought.

On the left-hand side, you can see two “philosophies of efficiency” that are essentially the same mathematically. Most people work on the one that Toyota labels “apparent efficiency.” During times of growth, it is natural for managers to seek efficiency that way. After all, they need to grow to keep up with demand.

But, just as times of affluence can hide tremendous waste, so too can chasing apparent efficiency hide the incapability of achieving “true efficiency.” That means matching output to customer demand (to do more would be overproduction) but doing so with ever decreasing use of resources.

If you have the organizational and operational capability of achieving the second type—true efficiency, or the same output with fewer resource requirements—then you can also easily attain the other type—greater output with the same resources.

That’s one of the first and most fundamental of TPS lessons, yet I rarely see “lean” companies attaining, pursuing, or even discussing it.

On the right-hand side is a graphic I must have shown hundreds of times. I can’t imagine a simpler, clearer illustration of the distinction between individual efficiency (local optimization) versus system efficiency (system optimization). This one is conceptually easy for engineers, appealing for anyone, yet extraordinarily difficult to attain. In fact, it may be that its relative attainment is the source of Toyota’s greatest strength.

I hope that readers find Kaizen Express helpful. This resource is the expression of an approach to kaizen that is at once a return to basics while at the same time emphasizing the centrality of individual and team learning. Kaizen Express is founded in the belief that the thinking of TPS can only be achieved through doing, embodying the quote I repeat over and over:

“It’s easier to act your way to a new way of thinking than to think your way to a new way of acting.”

One last note: Kaizen Express lead author Toshiko Narusawa doesn’t really like me to introduce her as I did during the webinar, as the ”top woman TPS sensei in Japan” but it must be true. Most operations in Japan remain male-dominated, but I am hopeful that the number of women with deep TPS implementation and coaching experience will grow. 

John

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

I wrote the past four columns while on a whirlwind tour of healthcare facilities in Japan, Australia, and Vietnam, a long trip that finally concludes today. I may write specifically about those experiences in future columns, assuming I can get my thoughts straight.

But for now, those visits were good opportunities to stretch my thinking into areas that are relatively new to me while at the same time exploring lean fundamentals through the series of columns exploring The Birth of Lean. Now it’s time to take that exploration a step further.

I hope you have seen the notices from LEI about Thursday’s webinar with Jim Womack and me. The theme is “Forward to Fundamentals.”

As I have stated previously in this column and elsewhere (a broken record lately), in recent years the focus of debate around lean transformations has evolved, understandably, from tools and practices toward more managerial and strategic matters. I was one of those who encouraged that shift. There had long been a serious lack of understanding of the thinking behind lean tools, practices, and systems and that lack of understanding led to mismanagement, organizational misalignment, and the ultimate failure of many lean transformations. So, the discussion of lean management, strategy, and culture is surely a good thing. Surely.

However, nowadays I am most alarmed by the lack of implementation of the fundamentals, almost everywhere I go. Sometimes I feel that the only thing that has improved is the ability of senior managers to talk a good lean game. More and more executives have learned to debate finer and higher level lean concepts. Yet when you go to their gembas – nothing.

Hence, my focus in recent columns on lean basics – including my recent rant about overproduction being forgotten – and my involvement in the creation of LEI’s two newest publications, The Birth of Lean and Kaizen Express. You know about The Birth of Lean by now. Kaizen Express takes a very, very different tack. A throwback to an earlier era of lean discovery.
Thanks to lead author Toshiko Narusawa for allowing me to partner with her producing a volume that tries to get closer to the original intent of the fundamental lean tools and practices. Kaizen Express tries to keep things as simple as possible (but no simpler!) and focus on what we should do to improve performance, to better serve the customer, to better ensure profitability – in any economic environment (Ohno’s original objective!).

Over the years, possibly no one has more than me advocated the position that, while TPS or lean was born in Japan, there is nothing about it that is “Japanese” in the sense that it can be adopted anywhere, in any country. I believe that to be true. There are two primary pieces of evidence for this position: (1) TPS is no more common in Japan than in other countries, and (2) there are examples of successful TPS implementation outside Japan.

However, the fact that TPS isn’t inherently Japanese in the sense that a company must be Japanese to adopt it is not to say that there is nothing that is Japanese about it.

Kaizen Express takes an approach to TPS and kaizen that is somewhat “Japanese.” It is extremely visual, with many graphics on every page. It is action oriented – “here is what you can do,” something very practical that you can try.” And it represents a Japanese or perhaps East Asian approach that goes from the particular to the general. In contrast with a Western approach that typically goes from the general (general principles, philosophy) to the particular. Another way to think of the Kaizen Express approach is “entering through form” or pattern. This is the way lean is typically introduced in Japan. Similar to learning a martial art, through practicing the kaizen routines, employing the practices and tools, you gradually come to learn the patterns and adopt the habits and instincts of lean thinking.

There are plusses and minuses of both approaches and I’m not advocating one over the other. I have long been hopeful that a third, or “best of both worlds” approach, will eventually emerge.

Hope you can join Thursday’s webinar with Jim (and apologies to friends in Australasian, East Asian, and other inconvenienced time zones – please view the archived webinar when you can!).

John

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

This week I continue my indulgence in exploring the Birth of Lean with a look at another chapter that some readers may tend to overlook. Instead of quoting heavily from the book – please read for yourself! – I'll share some personal observations.

Kaneyoshi Kusunoki was a key player in the initial establishment of Toyota production operations in North American in the 1980s. He was the first president of Toyota's production facilities in both Kentucky and Ontario (a commonly overlooked fact). Kusunoki was non-resident president, so day-to-day operations were left to executive vice presidents Fujio Cho in Kentucky and Aki Iwabuchi in Ontario.

No one, however, who worked at either of those facilities or at NUMMI where he also made critical production system decisions, will ever forget Kusunoki's visits. More than the gemba visits of anyone else, a pending assessment from Mr. Kusunoki would set the Japanese managers and trainers on high alert – they knew his review was always toughest of all the Toyota HQ executives.

Mr. Kusunoki is now 95 years old. I was fortunate enough to get to know him fairly well over the years and would still pay visits to him in his office throughout the 1990s. Each visit followed the same curve. I would ask him a question or two and he would totally enthrall me with stories of the old days, when the company was ramping things up after the war. Then he would turn the tables. No matter what topic we might be discussing, he would point out how the original and best thinking on it usually came from America. Then he would slip in the question, "So how come you can never get it right?" I never had an answer that satisfied me, let alone him.

How to Think
Mr. Kusunoki joined Toyota in 1946, the first year of hiring following the war. He told me he was one of a recruiting class of six, count'em, university graduates to join Toyota that year. Toyota was still a small company back then. To join Toyota was not to join a firm that could promise lasting job security. Entering into Toyota’s employ was even a risk – no one knew if the company would succeed or not.

Kusunoki spent most of his career in production engineering, not actual operations management like Ohno. Kusunoki’s challenges centered around how to get things to work, how to pour castings that wouldn't break, to stamp steel that would hold shape. As Kusunoki tells it in Birth of Lean, he came under Ohno's direct tutelage – or as he put it to me, "man-to-man training" – in the 1970s, as both men advanced in their careers. Kusunoki tells us he was,

"…the first person to head both production engineering and production control at Toyota, so I was the first person to have the chance to establish integrated policy [for buffering and other issues]." (Birth page 146)

Kusunoki’s history of the evolution of buffers at Motomachi and Takaoka plants speaks to much more than just buffers. His description illustrates the deep concern that Toyota leaders put into thinking strategically about production. Buffer decisions weren’t viewed as simple matters of inventory calculations. They were strategic considerations based on a complex set of factors: how to operate a production system, how to think about downtime and its causes, how to view the psychology of the managers and engineers, and how to utilize buffers as a motivational tool.

Kanban as Kaizen
Kusunoki tells about developing early English explanations of TPS and of kanban in particular. As Toyota became famous in the 1970s, the need arose to explain TPS to outside audiences. The company was besieged with “kanban tourists”. The Birth of Lean reproduces the very first written English explanation of TPS, authored by Mr. Kusunoki along with Y. Sugimori, F. Cho, and S. Uchikawa for the Fourth International Conference on Production Research in 1977. In there, you’ll find buried one of the most telling illustrations of the thinking of TPS, right inside the simple kanban formula:

"Our paper expresses the number of kanban in circulation in a process, y, with the formula y=[D (Tw+Tp) (1+a)] / a, where D is the demand per time unit presented by the following process, Tw is the waiting time per kanban, Tp is the processing time, a is the number of parts per container, and a is the policy variable [or discretion]. Of special note here is a. Ohno-san taught us not to settle for the number of kanban necessary to maintain production at some rate but to work continuously to achieve a leaner flow by reducing the number of kanban as much as possible. He always said that steering that effort is the responsibility of workplace leaders. Without the policy discretion expressed by the a element, our formula would be a mere calculation that any clerk could perform. We knew that Ohno-san would never approve the paper if it did not contain that element." (Birth pages 141-142)

The calculation itself is simple. The telling portion of the story and the calculation is Ohno's insistence on including an alpha number, which stands for "policy", an "extra" amount of buffer to be determined based on the judgment of the human doing the calculation. Actually, Mr. Kusunoki told me that Ohno-san in fact did NOT approve the first draft of the paper and calculation, insisting on inclusion of the alpha value.

Ever the psychologist as well as engineer, Ohno refused to allow operations managers to fall back on simple numerical calculations that a computer could perform. He wanted his production managers to use judgment, to develop instinct, to pay attention, to never hide behind rules but to exercise their own discretion. The purpose of kanban is, after all, not just to set inventory levels or even to reduce inventory, but to do kaizen. Set the levels, use your judgment to determine an appropriate alpha value, and get to work doing kaizen to reduce that number!

The point of inventory isn't simply that it should be zero – yes, less is better so zero must be best – but that buffer is necessary for specific reasons. (Good friend and one of the earliest TPS researchers Doc Hall knew that, when to his chagrin, the publisher insisted on the title Zero Inventory for his 1983 book!) And buffers in various places are there for different particular reasons, serving different strategic purposes. For example, Toyota thinks about the buffer between stamping and body welding, between body welding and paint, between paint and final assembly each very differently. That difference resulted in, among other things, a painted body buffer of perhaps 40 painted bodies when I worked at Takaoka, compared with what would have been hundreds in a conventional automotive assembly plant.

Constant Evolution
Just two weeks ago, I visited the same Takaoka Plant that Kusunoki describes as important to the development of "buffer" strategy and where I underwent my own production training 25 years ago. Amazing. Pulling into the plant grounds, everything looks exactly the same as the last time I was there, about ten years ago. But, inside, the final assembly area is unrecognizable. The production line has been shortened beyond belief, the work of the workers made easier with very little walking, everything quiet and clean – the overall impression was more like an electronics plant than automobile.

That visit drove home to me, yet again, the intrinsic nature of constant evolution that comprises the deepest core of TPS. Kusunoki shares some of his thoughts about that with comments such as these:

"A defining characteristic of the corporate culture at Toyota is that managers don’t scold you for taking initiative, for taking a chance and screwing up. Rather, they’ll scold you for not trying something new, for not taking a chance. Leaders aren’t there to judge. They’re there to encourage people. That’s what I’ve always tried to do. Trial and error is what it’s all about!

We had no money after the war. We tried everything, like divvying up employees’ wages in small chunks, but we finally got to the point [in 1950] where we couldn’t meet the payroll and had to let people go. But even during those tough times, we maintained the spirit of trial and error.

When cash is short, your best shot is to speed the flow of material through your system. You don’t need capital spending to move things faster and shorten lead times. You simply need to improve the way you do the work."(Birth page 150)

The Kusunoki chapter is close to my heart. And writing this column has reminded me that I must send Mr. Kusunoki a copy of Birth of Lean! Don't be fooled by the chapter title, "Evolution of Buffering…". I was happy to hear from my co-author of Learning To See Mike Rother that the Kusunoki chapter is his favorite, not because of the technical discussion of buffers per se, but because careful reading displays some of the deep underlying thinking that Toyota put into designing an integrated automobile production system. And, as we all know by now, if we can get the thinking, we can design rational production systems for any product or service.

john

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

This week (and in some future columns as well, no doubt) I’ll indulge my deep interest in the history of Toyota by sharing some of my favorite stories from the words of the TPS innovators in the Birth of Lean.

Take the words of Michikazu Tanaka, on “What I learned from Taiichi Ohno.” Priceless. Priceless partly because they are reflections derived from his time of most intense learning under the direct tutelage of Ohno. Tanaka was already a successful production manager at Daihatsu when he met Ohno. Yet working with Ohno sparked a new and monumental leaning journey for Tanaka, and for his team.

Much of Tanaka’s learning took place when he was converting Daihatsu’s Kyoto plant to the TPS. I’ve never had the pleasure of visiting that plant, but many of my friends tell me that to this day Daihatsu Kyoto is one of the best examples of TPS in an auto assembly plant.

When the work of transforming that plant began, Tanaka knew Ohno mainly from reputation. And from what he knew, working with Ohno was not something to look forward to with glee. Ohno was already famous as a taskmaster.

(The following passages are taken directly from chapter two of The Birth of Lean. This chapter is comprised of a lengthy talk by Tanaka on his experience. Unless otherwise noted, they are in Tanaka’s voice. The material here is slightly edited for brevity. I urge you to read the original!)

Start with the work…

One day, Ohno-san demanded that we get rid of the automated equipment for conveying side panels between processes. Side panels are big and heavy, and they are difficult for even two men to carry. Conveying them manually would mean considerably more work.

Our automated equipment had raised the side panels straight up and then moved them horizontally to the next process. But our manual pulley system pulled the side panels directly toward the next process along a diagonal path. So the manual system conveyed the side panels faster than the automatic system had. Sure enough, Ohno-san had noted the time loss that our automated system entailed. Only when we actually tried an alternative method in the workplace did we see how much time we were wasting.

Ohno-san cut right to the chase on his next visit: “Has the removal of the automatic equipment been causing headaches for people in the workplace?”

“It was a problem at first,” I acknowledged. “And we experimented with a number of possible solutions. We finally settled on a pulley system, which has actually reduced the conveyance time some.”

“That’s good to hear. I wasn’t entirely confident about how things would work out. And I was thinking in the car about the trouble that I might have caused for your people. But I know that the workplace can be a source of incredible wisdom when the need arises. That really is good to hear.”

Ohno-san repeated two or three times during our conversation that he had been worried about causing trouble for people in the workplace. He was the first senior executive who I ever heard express that kind of concern.

I knew then that he really approached kaizen from the standpoint of the workers…

Gemba gembutsu [also genchi gembutsu: a commitment to seeing things (gembutsu) firsthand as they really are in the workplace (gemba or genchi)] was absolutely fundamental to Ohno-san’s approach. He never rendered judgment simply on the basis of hearing about something. He always insisted on going to the place in question and having a look. On occasions when we might press him for an opinion, he’d say, “You’re the one who has seen the thing. You know better than I do. How could I talk about something that I haven’t seen?”

“Your job isn’t to ‘teach’…”

(Ohno would assign individuals from Toyota to assist Daihatsu with their kaizen. On one occasion, he assigned a Toyota production engineer to help with some automation kaizen. Tanaka wondered how would help them.)

…for a week he did nothing at all. He simply watched what was happening in the workplace. On the Monday of his second week at our plant, he came by my desk and described his impressions and his plans as follows.

I watched the activity in your workplace carefully for a week, and I saw that people are working extremely well. I struggled to think of something that I could do for you, and my conclusion was that I have no role to play here.

I stopped by Ohno-san’s house on the way home Friday evening and told him what I have just told you. He said, ‘Your problem is that you’re trying to think of something to teach the people at Daihatsu. You don’t need to teach them anything. What you need to do there is help make the work easier for the operators. That’s your job.”

The real purpose of kanban…

In the beginning, Tanaka wasn’t a fan of Ohno’s kanban system. Over time and through experience, though, Tanaka learned what Ohno was really trying to get at with kanban. His conversation with Ohno:

…I was completely wrong about the kanban. I thought of it entirely in terms of reducing work in process, raising productivity, and illuminating problems. Of course, it is good for all those things. But your basic aim is something else, isn’t it? You use the kanban to create a positive tension in the workplace by reducing work in process, and that motivates people to do better than they ever thought
they could do. Isn’t that what you’re really aiming for?”

A professor from a German university came to our plant one time to learn about the kanban system. He started off by asking me about the purpose of kanban. I replied that the kanban was a tool for tapping people’s potential by fostering a creative tension in the workplace. “I had always heard that kanban were for reducing inventories,” he replied, “but your answer makes more sense.”

Kaizen and failing

To us, Ohno-san was like a god. But he was ever aware of his fallibility, and he was determined not to let his mistakes become a burden on people in the workplace. That’s why he was always impatient to try out new ideas immediately. “I don’t always get things right,” he’d say. “And if I’ve got something wrong, I want to fix it right away.” And that’s why we scheduled our kaizen in minutes and hours, not in days and weeks.

“If you’re going to do kaizen continuously,” he’d go on, “you’ve got to assume that things are a mess.

Kaizen is about changing the way things are. If you assume that things are all right the way they are, you can’t do kaizen. So change something!

Respect for people and the gemba and kaizen…

Ohno: “When you go out into the workplace, you should be looking for things that you can do for your people there. You’ve got no business in the workplace if you’re just there to be there. You’ve got to be looking for changes you can make for the benefit of the people who are working there.”

Here’s an example of Ohno-san’s approach. He was observing the work on an engine assembly line one time when he was a plant manager, and he noticed that one of the workers needed to lift a heavy engine block once during each work cycle. Ohno-san wondered why that was necessary. He called the production chief over and ordered him to go find out what was going on. The production chief came back and reported that the roller conveyor was broken.

“What in the world do you think you’re doing here?” shouted Ohno-san. “We don’t hire people to lift engine blocks. You go check and see right now if you’re not sitting on other problems just like this one.” The production chief soon reported three similar problems, and he received the predictable scolding from Ohno-san. “You’re out here on the floor every day, but you’re not really seeing anything: whether your people are having problems with something, whether waste is happening, whether you have overburden somewhere.”

“Ohno-san insisted that only about half of the activity in a typical workplace was value-added work. The rest was just spinning wheels, not making any money for the company. He taught us to see…

When Ohno-san sensed a problem, he’d spend an hour or even two hours at one spot. (He) would keep looking at things for as long as it took to figure out what the problem was. He warned us that “waiting until you’ve seen the data is too late for kaizen. You can evaluate the day’s data and figure out that ‘hey, that machine stopped a lot’ or ‘that process was improving,’ but the horse is already out of the barn. A whole day has passed while you were processing the data. You’ve got to act on the spot.”

Ohno on truth…

(This passage shares statements from Ohno that Tanaka captured. Tanaka’s comments on these thoughts are in brackets.)

“Telling lies is bad, but being fooled by lies is worse.” [Tanaka: Making decisions on the basis of written materials can produce bad decisions. If you’ve got doubts about something, you need to go to the workplace and see for yourself. The president at a company came from an administrative background, and he couldn’t determine what was what when a technical issue arose at a board meeting. So he went to the workplace to see what the problem was. He discovered that half of what a director responsible for production had said at a board meeting was untrue. The president started visiting the workplace occasionally. Word got around that he has keeping an eye on things, and the directors stopped making false reports.] “Managers and general managers are good liars. But directors are even
better.”

Anyone can gain knowledge through study. But wisdom is something else again. And what we need in the workplace is wisdom. We need to foster people who possess wisdom. The only way to do that is to set our goals high and force people to accomplish more than they might have thought possible.

Once people really resolve to do something, the necessary wisdom arises. The people grow, and they assert new capabilities. The kanban didn’t arise from textbook learning. It arose from practical experience in the workplace, and the best way to learn about kanban is to use them.

[Tanaka: “Ohno-san told us, “Books are appearing about kanban, but only someone who actually uses kanban can really understand how they work. You guys have learned about kanban by using them, so you don’t need to read my book.” So I never did read his book.”]

“People who excel at anything tend to be people who insist on seeing things for themselves. That’s because the facts are in the things that we can actually see, and we can only get at the truth through the facts. Just thinking about things in your own head won’t lead you to the truth.”

“We have too many people these days who don’t understand the workplace. They’ve got that tinfoil over their eyes. They think a lot, but they don’t see. I urge you to make a special effort to see what’s happening in the workplace. That’s where the facts are. And the truth is hidden in the facts. Our job is to get a handle on the truth.

And that’s what “gemba” or “genchi genbutsu” are all about – getting to the truth, gaining wisdom, respecting people and making things better.

john

Reader reaction to “Birth of Lean” is beginning to roll in and initial response in enormously positive. I look forward to hearing your thoughts, which I will pass along to authors Shimokawa and Fujimoto and translator-editor Brian Miller.

Dr. Womack’s simple construct to analyze companies – Purpose, Process, People – is familiar to you by now. I’ve toyed with it more and more since he first brought it up during informal discussions of the “LEI point of view” and his subsequent introduction of it in his e-letter of June 2006.

I used it in my column to explore the question I often get of “Why didn’t GM learn from NUMMI?” 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. Regarding purpose, I suggested that perhaps Toyota and GM have all along had different purposes and further that perhaps purpose simply isn’t something you just learn.

So, at last month’s Lean Transformation Summit in Atlanta, I decided it would be interesting to introduce a simple model. Everyone knows the TPS house. Well, here is the LEI 3P “balance scale.” Maybe it’s not perfect. The idea I was trying to get across was that the lean enterprise is a socio-technical system. STS theory has been around for a long time and I like to refer to the Toyota Way as a socio-technical system on steroids. You have to work BOTH the social side and the process side to be successful with it. It has to be an integrated, balanced, total system. The thing I like about the idea of depicting the model as a scale is that it emphasizes the fact that the two – process and people – must be in balance. And I must say that I find that companies never get this right. They may err in either direction, on the social side or on the technical side, but they always err to one side to the detriment of the other.

As you can see in the model, I’ve substituted “People” for “social” and “Process” for “technical”. Seems to work.

And it’s the role of management to balance the two. Of course, “management” are people, too, so you could say the model is a little funky in that regard. But, it seems to work for me.

So, how does your company look on this scale? In which direction is it tilted?

I ask “which direction is it tilted?” because I’m betting it’s tilted one way or the other.

In my view, when “continuous improvement” started, the initial emphasis was heavy on the social side. Teams, teamwork, empowerment, and all that. Sounded and felt good. But a lot of those companies never DID anything. And companies wondered why they didn’t get results.

Then we had the imbalance in the opposite direction. Companies slammed the tools and processes in place, worker involvement and employee understanding be damned. So, we had andon boards (very expensive andon boards) in place but turned off and kanban posts posted but collecting cobwebs (literally – I’ve seen it, you’ve seen it, too). And companies wondered why they didn’t get the sustained results.

We can identify those trends over time – over the past 20-30 years. But what’s more interesting and disturbing – but a useful insightful – is that even today companies are divided into these two camps: social companies and technical companies.

It’s the balance that makes the difference. The integrated balance. Toyota – when it’s operating like the high-performing Toyota we know so well – gets it right. They manage to do BOTH.

To circle back, it’s management’s role to balance those. But, management – managers – can only accomplish that with success depending on how well they can align them with the company’s basic purpose.

Suppose a company is really only in it for the short haul. Make as much money as we can as quickly as we can. How will the balance look?

So, how does your company look? How’s the balance? Is management working on it? Does the purpose allow it? Does the purpose even encourage it? Does that make a difference? I’m betting it does.

john

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

• easy to see problems.
• easy to improve.
• easy to learn from.

Here’s an interesting question: What is calculus? Is it a solution? Or a means to derive solutions?

So here's the thought to challenge our current day lean common sense: we've got the balance wrong again. If we let the pendulum swing too far over in the tool direction during the Tool Age, we may be letting it swing too far in the other direction today.

The Birth of Lean
I had the chance to challenge my own basic thinking in spades recently, by helping with the translation of a new LEI publication, released at the Summit last week, The Birth of Lean. I’m sure many of you are well aware of the work of Takahiro Fujimoto (see especially The Evolution of a Production System at Toyota). Taka teamed with another professor, Koichi Shimokawa, to interview and otherwise put into print the words of six of the most influential people in the development of Toyota’s system in the post-World War II period. Translator Brian Miller (thanks for letting me help, Brian) worked hard to make the words of the old guys really come to life – it's as if they are speaking to you.

The timing is amazing. The words of these key persons in the development of TPS, spoken during an earlier era of crisis for Toyota in Japan's war-torn economy, seem to fit today's economic crisis with little need for updating. Consider these words of Ohno:

"An increase in production volume shouldn’t necessarily mean a decline in unit costs any more than a decline in volume should mean an increase in unit costs. Those sorts of things happen as the result of arranging things poorly." (Birth, p. 53.)

In other writings, Ohno said he was trying to create a system to enable "success in a down market," noting that "it's easy to make money when everyone is making money. The key is to be able to make money when times are bad."

Sounds like he was talking about the current situation of too much and wrong capacity everywhere. Sounds like he was talking about today.

More next week,
John

John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

It has been about four months since the release of Managing to Learn, now already in its second printing. I’ve received incredible response from many quarters, some great reviews both on-line and in print, and some thought-provoking questions. Below are two exchanges you might find interesting.

Following are two questions from Dr. Jaap van Ede of www.procesverbeteren.nl, an “independent knowledge platform” in the Netherlands. The exchange was published in conjunction with his scheduled full review of MTL in the Dutch journal In Logistiek.

Dr. van Ede: I think it would have been better if the thoughts of coach Ken Sanderson would have been added to the story of trainee Desi Porter (then the reader does not have to switch between two stories and is still able to see what both persons are thinking).

JS: Certainly, simply stringing the story along sequentially would have been more conventional and is an approach I considered. And throughout the writing process, we were very concerned that the unorthodox two-column format might cause difficulties for some readers. However, testing some “rapid prototypes” of the two-column format showed that readers had less difficulty than we feared. Additionally, since publication, I certainly expected some readers to complain, but to my pleasant surprise the response to the format has been overwhelmingly positive. At any rate, I was aware that the format is highly unconventional and, of course, anything unconventional is also risky.

I became convinced that the risk was worth the potential reward after showing early drafts to test readers where I found that the format beautifully captured the tension of real-life dialogues that occur every day in business. Life, business problems, and people do not always come at us sequentially. There are always competing priorities, different organizations making different demands, two people trying to talk to you at the same time, fighting for your attention. Faced with those situations daily, we have to decide. Similarly, the MTL two-column format (which, by the way, we think is a unique innovation) asks the reader to make decisions, and provides flexibility to be read in different ways.

Dr. van Ede: Desi Porter seems to be the ideal A3-student. What can a sensei do if he is less lucky? It would have been nice if the book had also addressed this issue.

JS: This is an interesting observation, and this is the first time to receive this question. I am frequently asked the exact opposite: where can I find a Sanderson?!

In fact, I think that this is indeed the bigger problem, the lack of good “sensei” or mentors. As for the observation that Desi is an ideal student, yes, this may be true. But, my own experience is that young professionals such as Desi Porter will indeed respond if we – as the more experienced senior manager/mentor – reach out and try to provide opportunities for them to learn and grow. Yes, there is that small minority of individuals who will not respond. But, if we assume first that it is our role to mentor, I think we will have little difficulty in finding less experienced “Desis’” who will readily join us in embarking on a lean learning journey.

John
John Shook
Senior Advisor, Lean Enterprise Institute

Next are two more comment/questions from an engineer who asked to be identified only as a lean and six-sigma practitioner at a large aerospace manufacturer:

Engineer: Thank you for writing the book Managing to Learn. I read it between Christmas and New Year's Day, and it was fantastic! Before the Christmas break, I had been planning to try to improve our procurement system at work, using value stream mapping as the primary tool. But as I read, I kept thinking that the A3 will be a better tool for managing the improvement. A value-stream map will probably be useful, but it will only be a part of the effort. The book also helped me to realize some deficiencies in our value-stream mapping process (primarily that follow through and on-going improvement are weak).

To the best of my knowledge, no one has used the A3 in the past where I work, but there are a couple others that will probably be willing to act as my mentor, or we may be able to use a consultant.

I would like to offer two struggles I had with the book, in hopes that if others have the same struggles, they might be improved with the next version. The first is with the set-based approach. It seems as though it would typically take some considerable time to test all the counter-measures that Porter proposed on page 79 of the book. I see that there was about a month and a half between the A3 on pages 84-85 and the one on pages 98-99. I expect that during this time, Porter was conducting trials, collecting and evaluating data, and then down-selecting the countermeasures to implement across the company. But I'm not sure I have that exactly right. The A3 on pages 84-85 already has evaluations of each of the countermeasures. Were the trials already done, or is the evaluation based on the expected results? The question is more or less rhetorical for the example of the book. The real question is what I should do for my future A3s. I expect that when I first propose countermeasures, I will also include a test and evaluation plan. Then when I move forward the analysis section will tell what did and didn't work, and the plan will show the countermeasures that are selected to move forward. If I'm missing something here, I hope you can let me know. Otherwise, there is no need to get back to me on that topic.

The second struggle I had was with relating the PDCA cycle to the A3 process. It seemed to me that the A3 used more of an IIIPTPIF (investigate, investigate, investigate, plan, test, plan, implement, follow-through) cycle. I did get parts of the connection between the A3 and PDCA, but mostly it seemed like a stretch to make PDCA fit within the A3. Maybe I'm just not seeing the forest for the trees here, but to see the PDCA cycle seemed more of a distraction to me than a driving force.”

JS: Thank you for your excellent observations and questions! Thank you for reading Managing to Learn so closely. Below are responses to the two issues you raise.

Regarding the first issue of how Desi worked through his set-based countermeasures, you observations are correct. There is an assumption that Porter was indeed “conducting trials, collecting and evaluating data, and then down-selecting the countermeasures” and you are correct that I do not show that process in the book as clearly as I might. This was partly a simply decision based on the fear that going too far down that path might fatigue and even lose the reader. I think your suggestion to show more of this process would indeed make MTL a stronger problem-solving book. I do not plan at this time, however, to add more detail there in later versions. But, on the other hand, a sequel is always a possibility!

Your second observation is fascinating, that Porter’s “scientific process” was more “IIIPTPIF (investigate, investigate, investigate, plan, test, plan, implement, follow-through) cycle” than PDCA and that “mostly it seemed like a stretch to make PDCA fit within the A3 …”

Let’s see, first let me say that I think you are correct that IIPTPIF probably captures more closely than a precise interpretation of “PDCA” the steps taken by Porter. However, my view is not that it is a stretch to make PDCA fit within the A3, rather than they fit together naturally.

My view of PDCA is that it is not its precision that gives it its power. I remember just a few months after leaving Toyota being asked by a client in my first regular consulting job, “So, where are we now in the P-D-C-A cycle? Are we in the P or the D or the C or the A?” I was dumbstruck. I looked at him, realized he was quite serious, and paused for just a moment to collect my thoughts. Similarly, I am often asked to compare PDCA with DMAIC, 8D, and other “problem-solving” methodologies. Let me try to explain how I look at it.

I recall an insightful discussion of the matter from a different angle many years ago with my boss at the Toyota Technical Center USA, Mike Masaki. Mr. Masaki was an engineer’s engineer and head of body engineering for Toyota, a very central engineering function within the company’s product development process.

In the late 1980s, he learned about the famous Taguchi Methods (Toyota didn’t use them or even know about them), ordered a full set of Taguchi Methods materials and assigned a young engineer to do a thorough study of the materials and the method. The results of the study were that while the Toyota engineers agreed that the Taguchi Methods contained many good tools (many of which Toyota did in fact use, under other names), everyone agreed that what they liked about Deming’s PDCA was the spirit of PDCA. They saw PDCA as a simple, elegant expression of the scientific method. Simple, and also flexible. You could say that there is a certain lack of “rigor” within P-D-C-A per se, or a flexibility. Inside “P” is the “Investigate” activity you mention. Within Toyota’s PDCA, that Investigate activity will continue as long as necessary, three IIIs as you express it, or 10.

There is, in fact, a mini PDCA cycle occurring inside each of the bigger PDCA activities. So, actually, you are working within all aspects of the PDCA cycle, all the time. (More specifically, I should add, whereas you preceded “Plan” with three rounds of “Investigate”, Toyota often explains that before you can “Plan” you have to “grasp the situation” and often describes the process as “CA-PDCA” – the hair-splitting can get pretty deep!)

Similarly with the A3. While I introduce a template with a set number of boxes in MTL, at Toyota an A3 would sometimes have four or five boxes, other times as many as eight or more. It was a flexible tool, embodying the PDCA method, but using it whatever way would best tell the story of the situation or solve the problem at hand.

More than answers, consider those some thoughts inspired by your excellent question. Thanks and best of luck at your company!

John
John Shook
Senior Advisor, Lean Enterprise Institute

You will recall a recent column where I addressed the question of “Why hasn’t GM learned from NUMMI?” I received a lot of responses to that discussion which convinced me that many of you would like to hear more about it. Rather than just give you more of my thoughts, I decided it would be a good idea to get a GM insiders’ perspective on the matter. So, I asked a friend of mine from GM who is very knowledgeable about the company’s efforts to make the most of its experience with the NUMMI joint venture to give the question some thought and provide his prospective. Lou Farinola recently retired from GM after 39 short years with the company. From 2002 thru 2007 he was responsible for leading GM’s Global Manufacturing System. Lou was also at Cadillac in 1986 when the folks I mentioned in my column returned from NUMMI and first attempted to install TPS at GM. So, Lou is exactly the right person to share his knowledge and wisdom about what happened, what didn’t, and why. Lou and I hope you find the following exchange of value.

So, Lou, how would you answer the question, “Why hasn’t GM learned from NUMMI?”

Lou: Well, John, as you stated in your December blog, a simple answer could be that GM has in fact learned a great deal from NUMMI and continues to do so today. It is also true, however, that it took us a long time to really get it and to fundamentally change the way we designed and built vehicles as a result.

John: Give us an idea of what happened on the GM side in those early days.

Lou: When the folks you mentioned who had been stationed at NUMMI to learn for a couple of years came back to “mainstream GM” in the late 1980’s The Machine That Changed the World book had yet to be published and there were still very few people who recognized that Toyota was changing manufacturing forever. I worked for the Divisional Personnel Director at the time and I recall the conversations about what to do with this group of executives that had just spent two years learning TPS. Some felt that they should be consultants to our manufacturing team and others, my boss included, believed that they should be allowed to run a plant and demonstrate the new system. In the end it was agreed to use them as consultants. This might have worked in a receptive environment but unfortunately they found themselves in an organization that saw very little need to change.

John: I remember also hearing that they requested to be placed together, so they could support each other, but ended up being dispersed to different areas of the vast GM system. So in the beginning there was just too much resistance to change for them to overcome?

Lou: Yes, they were together for a short while but then separated to different areas and resistance to change was a major factor, but I would also say that the team tried to take the GM organization to where they thought it should be with not enough regard for where the organization really was at the time. For instance, they put a lot of emphasis on the power of the team on the plant floor. Certainly, the team concept is a very key part of TPS. But the Cadillac assembly plant had just been built and was organized around teams and team coordinators so the leadership believed that they had already “done teams” with the result that the NUMMI team concept didn’t appear to be anything different from what we were already doing. Without a doubt, the organization’s understanding of teams, team leaders, and most importantly the management behaviors required to make it work did not mature until many years later. What’s more, there was no comprehension of all the other elements of lean and the integration of those elements into a total lean system.

John: So what did it take to start to change the company?

Lou: Actually it took several things and several years. Let’s start with GM Europe. In 1992 a new plant was constructed in Eisenach, Germany. This plant was led by a charismatic Lean Thinker who had been trained in the Suzuki Production System at the CAMI plant in Canada. The plant was built to be a showcase of lean and is still one of the best in GM today. GM Europe became convinced and the Eisenach plant became a training ground for GM manufacturing leaders throughout Europe and GME leadership amplified the effort by hiring numerous Toyota and NUMMI managers to create a critical mass of Lean Thinkers to make the change last. They even hired a leading TPS sensei from Toyota Japan to help train the leadership.

In the U.S. we started getting serious in 1994 when the same Cadillac assembly plant was selected as the “Lean Vision” plant and assigned to demonstrate that an existing operation could be made into a lean plant. I was the General Assembly Area Manager at the time and we had a Material Director who had spent two years at NUMMI. An important point to make here is that the people who were returning from NUMMI assignments were beginning to move around and up in the organization in line positions where they could really begin to make a difference. Anyway, this Material Director along with some central office help assigned by the Manufacturing Manager (the same guy who ran Eisenach and was now promoted back to the U.S.) decided to start with fundamentally changing the material management system for the plant. They worked on internal and external material flow, moving to much smaller lots and pulling rather than pushing material to the line. We set a target of no more than four hours of material at the operation, no more than 1 day of material in the plant and all material within the operator’s footprint. This turned out to be a great place to start because it demonstrated positive business results and also created a few more material jobs which most people considered desirable work. The improved material flow allowed me and my production team to embark on several other strategies like work station set up, line compression, fixed position stop and installing small buffers in the conveyor system. I could talk about what we did for hours but the point I want to make is that for us, the material system was the right place to start. I should also say that as managers returned from NUMMI and took assignments in other GM plants similar things took place at virtually every location.

John: So you had the U.S. and Europe going on parallel paths.

Lou: Yes, parallel but I would say not coordinated.

John: So how did the single Global Manufacturing System get started?

Lou: Good question and here is where leadership played the key role. In 1996 GM had decided to build four new assembly plants in four countries: Poland, China, Thailand, and Argentina. The CEO at the time, Jack Smith, was very committed to a strategy to make all GM’s operating systems globally common. He directed that since all these plants were going to be GM plants, he expected them all to have the same operating system with common principles and elements. Now by this time we had a good number of people with lean knowledge and we needed to get everyone on the same page. So representatives from North America, Latin America/Africa and the Middle East, Europe and Asia convened in Eisenach to work with the teams building the new plants to develop what is today GM’s Global Manufacturing System.

John: From all reports and according to any number of objective measures, GM manufacturing has come a long way. And it’s clear that everyone is speaking a common language as it relates to lean. How far along would you say GM is today on its lean journey?

Lou: Well, obviously we still have work to do, but I would say that there is a very good foundation in place and real progress has been going on for the last 10 years or so. Looking at each of the Five Principles that make up GM’s Global Manufacturing System, I would say that we are pretty solid in the areas of standardized work, built-in-quality, lean material flow and continuous improvement. This last one is critically important because it fosters a mentality that we are never done. The area where we have always had the biggest challenge, especially in the older plants, is people involvement. Don’t get me wrong, we have plants in every region that are outstanding examples of this principle, too. But I have to say that we have more work to do to get to the level that you talk about in Managing to Learn.

John: Well let’s leave it there for now and see what the readers think. If people found this useful would you be willing to answer a few more questions about the GM experience?

Lou: Sure.

Thanks, Lou. I have more questions myself, but I’ll stop here and we’ll see what our readers come back with. Who knows, maybe Senator Corker from Tennessee will join in.

John

John Shook

Senior Advisor, Lean Enterprise Institute, Inc.

Thanks to Anthony for noticing that there were only 10 principles for the CE - it would have been too funny had there been 14. (“Too bad there are not 14 principles of a CE!! - Anthony.)

As for Anthony’s incentive question (What incentive is there for someone to take a role like CE, if not for better pay?), I think the direct answer to the question is simple enough on the surface. But, a search for a “solution” quickly becomes very complex.

There is no shortage of research that shows that money is NOT the most powerful incentive. I don’t have any data at my fingertips right now (perhaps another reader can provide?), but research results I’ve seen shows monetary reward quite far down the list of effective incentives. Far more influential are such things as recognition, feelings of belongingness, or the opportunity to do work that is interesting or challenging. Sounds “soft” I know, but I believe it. We go to work eight or so hours per day, 250 or so days per year, for 30 or 40 years. Is monetary compensation enough to keep motivation up? I think CE’s get plenty of “reward” from the sheer challenge of leading projects through great adversity to success.

The deeper question is whether Toyota’s exemplary system design, the CE being case in point, can provide lessons for other companies. It’s worth noting two more things regarding all this.

Technical Skills and Social Skills – Each Equally Important (!)
The challenges to establishing the CE way of working are two-fold (more, really, but these two in addition to all the usual challenges associated with fundamental change in the way we work). The important takeaway from Hasegawa’s list of characteristics of successful CEs was the need to possess a set of equally important technical and social skills. Let me repeat, the technical and social skills are equally important. Not an easy balance for an individual to attain. But, the real challenge in implementing the CE system doesn’t end there. The bigger challenge is two-fold:

1. Finding or/and developing individuals with that critical combination of technical AND social (including business) skills.


2. Achieving recognition among your functional leaders about both the role of the CE and their own role:
   
1. The role of the CE is to provide the vision for the product, the vision for the company on behalf of the customer,


2. The role of the functional manager is first to make the CE (the owner of the destiny of the product and customer) successful,


3. Their role to create a work-class function must not preclude or interfere with their role of supporting the CE.

Engineering Chief Engineers
As I have seen organizations attempt and struggle with the CE concept, they have tended to focus on the first of those two, finding or developing individuals who could successfully possess the right set of skills. This is admittedly a formidable task. Toyota figures it takes 15 to 20 years to develop the full range of necessary skills. (By the way, it’s good news that since the Toyota Technical Center USA has been conducting substantive design work in North America for close to 20 years, Americans are now being given this role).

But, my experience shows that the second problem is actually the most difficult to overcome. You could call this organizational resistance. Part of the problem is simply that it is difficult to get people to agree to what they perceive as “giving up power”. Playing together can be difficult. Especially when the rules don’t encourage it. By “rules,” I’m talking the rules of engagement as measured by functional performance, not by value stream. If my bonus, as a functional manager, is determined by targets that are purely internal to the workings of my function, I can hardly be expected to change my behavior very much to accommodate the desires of a CE.

This takes us back to a fundamental question, what can you “rely” on, upon what is your basis of authority to lead, if not the authority of your position?

Many leadership discussions would now plug in a set of characteristics or skills, not unlike those of Mr. Hasegawa from last week. While I won’t exactly disagree with the value of even ultimate necessity of those skills (such as the characteristics of servant leadership), I’d rather focus on identifying things that a person can try to do, rather than something to try to be.

I’ll suggest that the search for something simple and practical to do takes us immediately to … the gemba. After all, most of us aren’t going to be full-blown Chief Engineers. But, can the leadership styles and ways of working of the CE provide something of a roadmap for all of us?

Gemba Rules
You know the word “gemba” means real or actual place and lean practitioners use it to refer to the workplace, the place where real work takes place. (By the way, sometimes you will see genba spelled genba with an “n” – don’t be bothered by it – it can be spelled either way.)

But, it also means “reality” or even truth. That is, it’s a philosophy of empiricism. It says, let’s not fool ourselves, let’s look at the situation – each situation – objectively, logically, scientifically, if you will. To do that, you have to get out of your office, step away from your monitor and your “data”, and go observe what is really going on. Toyota calls this principle, “genchi genbutsu shugi,” meaning the “principle of the real place and real thing.”

This relates to how we try to manage. We have very smart people in management here in the US or in companies anywhere. They are so smart, they think they can figure things out and determine direction from above, far removed in time and space from the gemba. At the same time, there is now a general acceptance – almost a fad, if you will – that “command & control” is bad. Well, yes, command & control is the root of many evils. But, what is offered up as an alternative? (Managing to Learn, by the way, is my attempt to define an alternative.)

Another factor is our habitual beliefs and systems and actions around ‘measurement” (including incentive system design and bonus calculations) which continue to have us chasing our tails and focusing management time and attention on the WRONG THINGS. And I mean measurement at all levels. At the corporate level with an over-emphasis on quarterly returns, at the work level with a focus on narrow measures that lead to local optimization which HARMS horribly system optimization, and at the individual level where will still pretend that money is the primary motivator of human behavior when we know from years of research that is not the case.

Instead of “Command & Control” - What??

Gemba-based leadership:

• Not just laissez-faire – step out of the way, “it’s up to you,”


• Not just MBWA – slapping backs and offering praise,


• Not just MBO – okay, you’re empowered, get the numbers – I don’t care how you do it.

Rather, managers who say:

• My job is to develop you, so I need to hear your thinking, and develop you through coaching you on the job.


• I will give you expectations that are clear and challenging.


• I will give you a deadline.


• I will expect you to report out on everything, all the time.


• I will ask you what you need; I’ll see what you need and provide on-going support and coaching as required.


• And I will be back to check on how things are going.

So What?
I think most of you have heard stories of gemba-based training and learning such as the “Ohno circle,” grounded in the belief that you can understand everything that is important about a company from standing and observing from a good spot on the plant floor (or other front lines, creating-gemba).

As Ohno said in Toyota Production System, “Of course we value data at the gemba. But, we place greater importance on facts” (my translation). An insightful, critical distinction.

But, you know, just going to the gemba isn’t enough. How do you go to the gemba? What do you look for once you get there? What do you do?

Here’s what lean practitioners do: grasp the situation, look for facts at the gemba, as opposed to analyzing data removed from it in time and place, and go through the Deming management cycle.

Put them together …

Together, they add up to what Al Ward called “management by science at the gemba.” (See Lean Product and Process Development by Al Ward for a discussion of the distinction between “scientific management” (often a simple search for the “one best way,” an approach that isn’t very “scientific” at all) and true “management by science.”)

And, together, they provide a means of escaping the management tailspin caused by belief that position provides authority and data substitutes for grasp of the true facts of the situation.

John

John Shook
Senior Advisor, Lean Enterprise Institute

Last week I shared this principle quoted from an unexpected source, the U.S. Marine Leadership Manual: "An individual's responsibility for leadership is not dependent on authority." I'll use that as our point of departure this week to continue with my thesis that the deep-rooted assumption that authority should equal responsibility is the root of much organizational evil. I believe misunderstanding around this issue is rampant, problematic, and runs so deep in our consciousness that we don’t even realize it.

The quote from the Marines draws fascinating parallels with the way I saw the dynamics of responsibility and authority work at Toyota in Japan in the 1980s, which we've discussed here before, will again today, and again in the future (it may become clear that I think this is an important matter).

The clearest place to see how this works in the Toyota organization – or anywhere I know of – is embodied in the role of the Toyota Chief Engineer (or CE), Toyota's product development "shusa system". Let’s take a look at what Toyota's traditional Chief Engineer system looks like (there have been changes over the past 15 years, but the essence of how it works surely remains the same).  

As you can see, it looks like a matrix. It is a matrix. But, the "software" or organizational operating system behind it is radically different.

Across the bottom you see the various operating functions. Silos. Stovepipes. These function as vital storehouses of deep technical knowledge and competence (thus many companies call these "centers of excellence"). Cutting across, are the product lines or value streams, creating value from the perspective of the customer, while ensuring profitability for the company, for the product line. When I encountered this (as I mentioned, there have been changes since then) there were about 15 functional engineering departments and, coincidentally (?) about 15 vehicle programs going on at any time. For a given program, a CE would need to direct the efforts of about 10 major functional departments. Conversely, a functional department general manager would have to support the work of all 15 programs, but only about half of which would require intense support at any one time. (See chapter 8 of Toyota’s Product Development System by James Morgan and Jeff Liker from Productivity Press for a great description of how Toyota's Chief Engineer system works. See Chasing the Rabbit by Steven Spear from McGraw Hill for an enlightening discussion of the reality that modern matrix systems now have too many silos that are too deep in specialization for any one person to manage in a traditional way.)

What's structurally unique about Toyota's product development matrix is that almost no one reports directly to the Chief Engineers (just a small support team). All the headcount lies in the functional silos. The performance appraisals of the engineers doing the work is conducted by the functional managers (with input, however, from the Chief Engineer).

And the point is … ?

At issue here is a very fundamental matter: how decisions get made. In a traditional functional/hierarchical organization:

- Position establishes (or seems to) authority to make decisions.

But, in cross-functional organizations – where almost all of us reside – this mental model will cause confusion, frustration, and breakdown of the decision-making process. That thinking will cause precisely the frustration and confusion that so many of us experience everyday in our organizations.

In a value-stream or lean-learning organization:

- Position establishes responsibility to get decisions made.

Discovery  

Working at Toyota frequently exposed me to things that seemed simple enough on the surface but upon deeper reflection revealed profound insights into how organizations and processes work. In 1991, I was transferred from Toyota Japan to become general manager of administration for the just-expanding Toyota Technical Center U.S.A. in Ann Arbor, MI. My new assignment required a crash course in understanding Toyota’s product development world, which was quite different from the Toyota I knew. So I began my new journey with a deep dip inside the technical centers in Toyota City and Higashi Fuji.

One thing I thought I knew about Toyota's product development was that Chief Engineers were kings. Toyota is remarkably egalitarian once you get inside. There is hierarchy, to be sure. But Toyota's promotion process rewarded experience, ensuring that almost everyone would eventually achieve a rank with substantial stripes. All in all, much effort was expended to ensure that we all knew we were in the same boat. Chief Engineers, though, were surely different. Or so I thought. (Speaking of "egalitarian", by the way, glamorous Chief Engineers received roughly the same pay as the lowly foremen on the assembly lines that built their cars.)

So, imagine my surprise the first time I heard a Chief Engineer say, "I have no power." I heard it a second time and considered that it might actually be true – I was already familiar with how the "responsibility versus authority" dynamic worked out in other parts of the company. But, at the same time, the Chief Engineer was surely the most powerful person in the company. The third time I heard it was from a functional department manager who stated, "We can say 'no' to the Chief Engineer if we think he is heading in the wrong direction." This was fascinating – a real archetype of the dynamic of leading with no power, of clear responsibility without simple positional-based authority.

So the Chief Engineer has no choice but to lead by the soft skills of true leadership. By soft skills, I am referring to the suite of skills written of in books about leadership or management books and taught in leadership training – characteristics such as "leading through influence" or "servant leadership" or "win-win negotiating". Choose your favorite. For the CE, those characteristics and skills are not optional. He is unable to simply pull rank, to put his foot down and demand that the functions do as he demands. Functional resources can and do tell him "no" if and when they have a good reason. He can only lead by being knowledgeable, proposing good ideas, expertly negotiating multiple priorities and wishes, and being very strong. In short, he has to lead by exercising true leadership skills, not relying on the authority vested in him by virtue of his position on an organizational chart.

Wow. Sounds like a tough lie, yet Toyota vehicle programs at least up to that time almost always came in on time and with desired profitability and market performance. How did this come about?

Creating a Process

Toyota's first Chief Engineer, who led the development of the company’s first true passenger car, the 1966 Crown, was a remarkable man named Kenya Nakamura. By all counts, he was as irascible and demanding as the much more famous Taiichi Ohno was in manufacturing. Also like Ohno, he was sponsored by Eiji Toyoda – both Ohno and Nakamura stated on numerous occasions that they never would have been successful without Eiji's full support. Also, like Ohno, others around him were not necessarily so enamored with his demanding and unconventional ideas. Nakamura once angered a board member so greatly (accusing the executive, in front of other board members, of having "no dreams" for the company) that he was demoted, which made him a member of the union. As a union member he promptly accused union leadership of trying to destroy the company because "all you do is complain". The union leaders responded by ordering membership to refuse to talk to Nakamura, so for a time no one in the company was even sure if Nakamura was union or management! A passionate leader, to be sure.

But, it was his lieutenant Tatsuro Hasegawa who codified the behaviors, the leadership characteristics and practices that make a good Chief Engineer, the enabling x-factor of a system in which the leader has no real power, no "authority."

Hasegawa had joined Toyota from the aerospace industry, where he had learned a "chief engineer" process that was similar to that which Toyota eventually adopted (though he observed that Toyota eventually took the process even further than did the aerospace companies). From a combination of his previous experience combined with his observations of Nakamura's success (and, I hazard a guess, his failings), Hasegawa gives us yet another list of what we might call "management principles" or traits (my translation from old Toyota Japanese language documents):

1. Gain broad knowledge and point of view

2. Develop a clear vision

3. Conduct research that is broad and deep

4. Apply knowledge and skill toward achieving concrete results

5. Persistently repeat each task as necessary – never give up

6. Have confidence, believe in yourself

7. Never delegate responsibility

8. Create alignment with lieutenants and other key people

9. Never take the easy route to make it easy for yourself

10. And possess these characteristics: i. have right knowledge, skill experience; ii. be decisive with good judgment, iii. have generous spirit and think big, iv. be composed, not overly emotional, v. be vigorous, vi. be tenacious, vii. be a leader who others wish to follow, viii. possess strong skills of communication and persuasion, ix. be flexible, x. exhibit unselfish dedication to success.

CE Hasegawa, in addition to giving us the 10 principles of a Chief Engineer, was also CE of the first Corolla, regarding which he famously declared the company’s goal to:

"Utilize the Corolla for the happiness and well being of everyone on Earth."

It's my belief, by the way, that Eiji Toyoda knew exactly what he was doing when he structured things this way, giving overwhelming responsibility to the Chief Engineer yet maintaining the essential autonomy of the functions. Eiji created the new position, called "Shusa" at that time (the term was officially changed to the English Chief Engineer about a year before I joined the product development organization in 1991), just for Nakamura, a position "outside the organization" as Hasegawa later described it. This framework provided tremendous flexibility and also instilled beautiful checks and balances to ensure that programs or the company would not go off the deep end due to too much influence from any one person or function or department.

So what?

So here's a caution. Remember that the Chief Engineer system – just like all Toyota processes – is a solution to a problem. To understand them properly it's necessary to go back and consider what problem Toyota was trying to solve? That’s how we can all always develop appropriate solutions to our own problems. At issue is not just how to copy Toyota's solution to its problem (sometimes copying is a fine way to get started, however – more on that in a future column) but to consider how Toyota's solution to its problem can inform our solution to ours.

First, let's review the problem. If the focus of a lean organization is the horizontal flow of value, as overseen by a responsible person, yet there are strong functions, how do those doing the actual work avoid the dreaded “two boss” problem?

Organizational Structure – Choose your poison

• Functional Organization
  
  
  • Invented by GM (with much borrowing from DuPont, and no doubt some others)
  
  
  • Provides functional excellence
  
  
  • Encourages silo "dysfunctional" operation
  
  

• Business Unit Structure
  
  
  • Aligns resources under one responsible individual
  
  
  • Provides alignment and direction around the product
  
  
  • Also results in silos of its own
  
  
  • Results in redundancy of resources and loss of functional excellence
  
  

We all hate the organizational matrix. And our usual response is to wish it would somehow just … disappear. Or, if we can garner the clout, to try to make it disappear. So, we reorganize, perhaps turning the organization on its side, placing resources along the flow of work of product or service lines.

But, in the end, such organizational fixes are just band aids or short-term fixes that lead to their own problems. Instead of a reorganization, perhaps a better countermeasure might lie in the software of how we get our organizations to operate.

In closing, lest you protest, "Sure, Toyota can do that, but it would never work here…" please recall the quote we began with from the U.S. Marines: "An individual’s responsibility for leadership is not dependent on authority." I think the issues are only (1) the recognition of the need, (2) the decision to try, and (3) the will to make it work.

John Shook
Senior Advisor, Lean Enterprise Institute

• Planning
  
• Organizing
  
• Commanding
  
• Coordinating activities
  
• Controlling performance

But, what has long fascinated me about Fayol is his list of 14 principles. Aside from the funny fact that his principles total exactly 14 - same as both Deming and Liker - what is significant about Fayol’s early articulation of management principles is the basic thinking they represent. These 14 principles of management of Henri Fayol comprise a comprehensive framework of general organizational management:

1. Specialization or division of labor
   
2. Authority with responsibility
   
3. Discipline
   
4. Unity of command
   
5. Unity of direction
   
6. Subordination of individual interests
   
7. Remuneration
   
8. Centralization
   
9. Clear line of authority
   
10. Order
    
11. Equity
    
12. Lifetime employment
    
13. Initiative
    
14. Esprit de corps

Note in particular, Fayol’s number two -- authority with responsibility-- an important topic dealt with in Managing to Learn. The basic assumption that authority should equal responsibility is the root of much organizational evil, a topic I will return to again. In the meantime, you can check out the relevant sidebar that appears on page 81 of MTL here.

These 14 principles of management of Henri Fayol comprise a comprehensive framework of general organizational management. Even though you never heard of them until today, they have been infecting the way you’ve thought about organizations your whole work life.

js

John ShookSenior Advisor, Lean Enterprise Institute

Whew! 2008 is over.

I often take advantage of relaxing holiday time to go over old things, take care of less pressing matters that I often don't have time to get around to, and do a little 5S. Or one or two of the Ss. It's hard to work on all the Ss at once; in fact, the thought of it becomes so daunting that you tend to keep putting it off. In fact, when we lump them all together -- "5S" -- the meaning and value of each S tends to get lost. Taking them one at a time, I was able to make a little headway over the past couple of weeks.

The first S is, of course, to throw away things you don't need. That’s called "Sifting" (from the Japanese Seiri) and I'm just not a natural at it. One look at my office is proof. I tend to hang onto things, "just in case". You have to sift and get rid of the things you don’t need before you go to the second S, which is to organize or "Set in place" (Seiton in Japanese) what's left over after purging. Going through old documents, I found an assessment I wrote of the "state of lean" exactly ten years ago. Here’s what I wrote for a lean manufacturing conference in 1998:

• Quality to the customer has improved but at huge cost due to end-of-line rework.


• Companies claim their people are their most important resource but still hire and fire as the easiest means to deal with fluctuating demand -- hardly a surprise, then, that labor and management still don't trust each other.


• The way manufacturing works with sales makes it impossible to schedule and run operations rationally. That problem is compounded with the way orders extend throughout the supply chain, resulting in demand amplification, stock-outs, and remaindered finished goods.


• The way we measure performance doesn't provide information useful to running operations, and often, in fact, encourages wrong decisions.


• Much existing capacity is old, inflexible, and designed for maximum economies of scale, thinking "bigger is better," ignoring the inevitable downturn, the cancelled order, the changes in demand.

Rereading 10 years after, it's striking how little things have changed. The dialogue around "lean thinking" is certainly much more sophisticated than it was 10 years ago -- many of the topics discussed in this Column would not have resonated with many people then -- but how much progress has really been made? It's popular now to make the observation that the tools and practices of lean are widely in place and that therefore current challenges lie in "deeper" dimensions such as management or strategy. I've made those observations myself, and that's part of what spurred me to write MTL.

What lessons from the 2008 economic disaster are there for lean companies or companies that wish to be lean? I'm sure we’ll be sorting out the answer to that question for quite some time to come. But, not unlike the way I began the New Year with a personal 2S campaign, I can't help but think companies would benefit greatly from a solid return to the basics.

A quick return to original Toyota TPS materials shows the following:

• Begin from need --TPS isn't a hobby, or a fashion statement, it's a means of solving a problem.


• Shorten your lead times -- the process of doing this forces you to improve everything and achieving it enables flexible response to whatever challenges confront you.


• Make work flow -- that's how you shorten your lead times while creating flexibility and efficiency.


• Build quality in at each process -- the above two points don't mean to shorten the lead time of flowing junk through your system.


• Get serious about standardized work and kaizen -- you know you haven't been.


• Treat everyone with respect -- that doesn’t go away when times are tough -- when times are tough, more than ever you need everyone to pull together.

The purpose of these basics is to add up to these specific, game-changing results: Systematic reduction of total system costs and enhanced ability to respond flexibly.

Just what the doctor ordered for 2009.

js

John Shook
Senior Advisor, Lean Enterprise Institute