John Shook's Lean Management Column

It's Not the Crisis; It's How You Respond to It

2010-02-05T10:27:00.000-08:00

He probably didn't ask for a problem of quite this magnitude, but like it or not, Akio Toyoda has his crisis. Akio took the reigns with a proclamation that he wanted to change the company, to rid it of (his words) "pervasive hubris and arrogance" or, (my words) the same Big Company disease that he saw grip GM so deeply for so long. For about a year now Akio has been saying that he wants to take the company "back to basics." No less an authority than Taiichi Ohno said you need a crisis to truly embrace TPS. So, Akio has his opportunity.

As always with things like this (Toyota's crisis, if it doesn't go without saying) it's not the crisis; it's how you respond to it. So far Toyota hasn't responded well. The company will pay a price for that. But, if they problem-solve their way out of the quality and cost issues, the public may forgive them quickly enough.

Murphy on Steroids
Things can and do go wrong for any company. Yet Toyota has a special relationship with problems. The company has thrived for years by developing an obsessive focus on continuous improvement and problem solving. In Japan, they call Toyota people "problem-solving junkies." If any company can get to the bottom of an issue like this, a problem like this, it's Toyota.

The first thing they have to do is protect the customer. For whatever reasons, through whatever set of complex circumstances, they have failed their customers. I know that fact is absolutely excruciating to the leaders of the company now. Secondly, they have to take care of their dealers, so that the dealers can take care of the customers.

Thirdly, the company must turn its attention back to itself, to examine the root causes of what has happened throughout this entire episode. Toyota must conduct this investigation on two levels. First it has to confirm the specific technical cause or causes. People have died here. The company tells us it has figured that part out. Secondly, it must look at itself deeply and ask whether there is something more systemic going on: is there something deeper inside us as an organization that has allowed this to occur? Knowing the company as I do, there is no question in my mind that it will go through this reflection, this deep self-examination.

If Toyota finds something seriously awry deep inside the company that it has become, will its people be able to resolve the issue? After all, human organizations are imperfect. Maybe even ... yours. The question is, can we look at ourselves honestly, challenge ourselves at the deepest levels, and try to take ourselves - as imperfect humans who work in imperfect organizations - to higher, better levels? Toyota has done that in the past. Toyota has shone a light on ways that a human organization can work at levels never seen before. So, if any company can do it in the face of a crisis such as this, I think Toyota can. But, we shall see. It is up to them.

First: Protect the Customer
We all know how this works in the factory. When you encounter a problem, your first responsibility is to protect the customer - in the factory this is the following process, the immediate downstream worker. That means, before you "encounter a problem" you have to know how to spot a problem, you have to know what a problem is. Then you need to know exactly what to do, what action to take, once you've spotted one. That action is to call for help, for someone to come help you decide what to do. Those two actions together are known as "stop and notify." Then you need to know what will happen next (if you expect to be blamed, you probably won't be eager next time to "stop and notify"!). So, what will happen is that someone (your team leader) will come to your aid. He or she will take a look and make a quick decision of whether to (1) apply a quick remedy, (2) stop the line, or (3) let it go through marked for remedy later (with 1 or 2 being BY FAR the preferable alternatives).

Having handled the immediate problem, the next step will be to stop and ask if there is a deeper root cause to investigate: Is this a repeating problem, is there a pattern to its occurrence, does engineering need to be notified? And so on.

That's in a factory.

The same sequence of steps is playing out now for Toyota with their massive accelerator, floor mat, sudden acceleration crisis. Right now, they are in the "stop and contain the problem to protect the customer" phase. They must protect the customer and take care of the dealers so the dealer can take care of the customer (reminiscent of the principle laid down by Shotaro Kamiya, developer of Toyota's approach to sales & marketing: "Customer first, dealer second, company third!"). Separately, they will need to go back and thoroughly analyze exactly what happened and why

Slow to Respond ...
Toyota's response to the gas pedal, floor mat, sudden acceleration problem has been slow and curiously ambiguous. What sounds simple enough on the surface (gas pedals and floor mats for crying out loud) has turned into a massive crisis for the company. One would think that if a simple mechanical fix could fix it, the company would have already done what it needed to do. Now additional technical issues are being raised.

Scrutiny of problems attributed to the accelerator pedal and floor mats is leading to scrutiny of the ETCS-i system it has used for the past eight years and could even lead to scrutiny of the electronic controls on vehicles going back even further. And that is an issue that is far too messy to want to deal with in the midst of a media circus like this.

Regardless, the result is that since Toyota failed to respond adequately in a timely manner to the acceleration problem, the company now finds itself in a credibility crisis. EMI has been a smoldering issue for the entire industry for a long time. Whether Toyota's sudden acceleration crisis trail leads to EMI is yet to be determined. But the underlying problem with EMI (as I understand it) is that it is indeed problematic and no one fully understands it. Not just Toyota, no one in the industry.

Credibility
Sounds like a long way from floor mats. And, technically, it is. But, perception is now one of the most important matters at play here - perception and reputation and credibility. And credibility along with the trust it has engendered with its customers has been Toyota's greatest strength. That credibility and associated trust equity has carried them a long way. But, now the company is expending much of that equity. It may come down to, "What did the company know and when did it know it?"

So, Akio has his crisis.

Crisis gives occasion to greatness. Without the crisis of 1950 and Toyota's determination to be the best in spite of its disadvantages, Taiichi Ohno would have been just another good production manager, remembered fondly by those who worked for and with him, not revered throughout the global manufacturing world. All accounts are that there was nothing to indicate that Abraham Lincoln would be a great leader - it took a national crisis to bring out the greatness.

Akio was born the year before his company first tried and failed to sell cars in the US. Those cars were so bad - they couldn't sell them and they weren't worth sending back to Japan - they ended up dumping a bunch of them in the Pacific Ocean.

So, for Akio now, this is his crisis. And his opportunity.

john

John Shook
Senior Advisor, Lean Enterprise Institute

Detroit Auto Show Overshadowed by Dr. Womack's Trashing of Toyota

2010-01-25T10:37:00.000-08:00

Jim Womack's most recent e-letter titled "Beyond Toyota" has sparked a lively and even rancorous debate. "We all, even including Toyota, need to go beyond Toyota," Jim wrote, adding, "the wonderful days of Toyota sweeping all before it as it reveals more and more aspects of its value-creating methods are done."

Many have reacted strongly to these words. Actually, re-reading Jim's letter now, I find that those two sentences, the most provocative of his comments, aren't really all that provocative.

Anyway, debate is a healthy thing, right?

As for "Lean". . .
Yes, "lean" is in many respects the wrong term. I think most of us have recognized that for a long time.

And, regardless of the term, the typical interpretation of "lean" became far too narrow. Lean is more than just tools.

As for "TPS" or the "Toyota Way", I have previously distinguished between the Toyota Production System and "Toyota's production system." I say that "I distinguish..." but I didn't distinguish anything until taught to do so via a difficult lesson from Mr. Ohba, my boss at the time at TSSC. To my great frustration as I tried to argue in response to some of Mr. Ohba's specific lessons that, "look, Toyota doesn't actually do all of those things...", Mr. Ohba admonished me to "never confuse the 'Toyota Production System with Toyota's production system'." I was furious, because that effectively killed the debate I was trying to engage him in. Later, upon calming down, I realized that it was one of the most important lessons he provided me.

That lesson is critical to the current raging debate which centers partly on the question, "Is there more for us to learn from 'TPS' or the ‘Toyota Way'?". Well, I don't know about you (or your company or clients), but for me and mine there certainly is - we're still scratching the surface!

As for Toyota ...
If, on the other hand, you ask, "Is there more to learn from "Toyota" (the company) and its production and management?" again, I think the answer is clearly "yes," though it is equally clear that Toyota is stumbling. And it is POSSIBLE that the company has more than merely stumbled, it's possible that Toyota has lost what once made it so special. I say it's "possible" because only time will tell. Time WILL tell.

Detroit Auto Show: Toyota Versus Hyundai
Here's a fascinating sidebar to the debate of "Toyota versus lean and Toyota's decline versus what remains to learn." Mike Rother and I attended the Detroit Motor Show (always lots of fun, even for recovering gearheads, as we each claim to be - "recovering" that is). We went on an "industry preview day'" a day for auto industry professionals (they let us in anyway) to check out the products up close before the show opens to the public.

The nameplate that was getting all the attention of industry engineers was Hyundai. Competitor engineers were absolutely crawling all over the Hyundai vehicles, measuring, taking notes, taking photos, taking videos. It so happens that the CEO of Hyundai NA is John Krafcik. John Krafcik is the member of the Womack-led MIT team who actually coined the embattled term "lean." (John also happens to be one of the first two American engineers hired by NUMMI in 1984!)

Krafcik may indeed be a close observer of another new frontier in so-called lean - for the rise of Hyundai raises interesting considerations about whether there is more to learn from Toyota.

We know that, mainly, Toyota competes with itself and doesn't participate in a lot of typical "benchmarking" (they do benchmark, but in very specific concerted ways). Instead they look in the mirror and ask, "How can we get better?"

But, Toyota as a company is paranoid by nature, and at significant times, it peers outside itself to set major challenges. In 1950 the company determined to "catch up with Detroit in three years," which was arguably the stake in the ground that led to 50 years of relentless continuous improvement. That challenge was inspired by looking outside first, and then looking inside to see what needed to be done, what improvements were required.

One occasion for Toyota to look outside itself was in evidence on the first working day of 1984 at the first annual Toyota President's message I had a chance to hear. Dr. Shoichiro Toyoda had been president since 1982, so this was the second occasion for him to deliver such an important message to the company.

For Toyota, the president's annual speech is far more than a ceremonial pep talk. The annual speech marks the occasion for the president to announce the direction (hoshin) for the year, laying out the challenges to overcome, and rallying the organization to attain higher levels of achievement.

His message on that day was remarkable, coming as it did following a year in which the company had set record profits, not just for itself but for any Japanese manufacturer ever, at a time when Japanese manufacturers appeared truly unstoppable. The way I heard it was simply, "the Koreans are coming, the Koreans are coming!" Decades later we know that the Korean auto industry is formidable. In the early 1980s, concern about Hyundai and Daewoo seemed like a joke. The impression I received on that day was that the challenge from the Korean auto companies was imminent. We Toyota employees needed to meet the challenge by redoubling efforts to develop better products, provide better service, to satisfy customers.

I think Dr. Toyoda already knew, even at that time, that his company had surpassed the industry pioneers in the U.S. and Europe. He knew Toyota could no longer find its challenges there. And he knew his company needed challenges. As I wrote in a posting in December 2009, Toyota isn't Toyota without challenges:

"Toyota can't exist - Toyota can't be Toyota - without a challenge. That's true at the micro level - each work group and each individual - and for the company as a whole."

"There's little doubt that Toyota will weather this storm and in fact come out the other end stronger than ever. But, the bigger and somewhat ironic problem for Toyota is the fact that the need and opportunity to respond to these immediate problems will come as a welcome distraction from having to face its true, deeper, crisis."

Perhaps you can't visit the Detroit Auto Show, but you can read Alex Taylor's cover story for the current issue of Fortune magazine. For Dr. Toyoda, the challenge of the Korean auto industry was a challenge that demanded attention from his company in January 1984. In January 2010, the rest of the industry agrees.

But, Toyota's crisis has nothing to do with the Koreans.

"Lean" - What's in a Word?
Toyota is Toyota and they do what they do to achieve their aims. The rest of us observe that and try to understand it, in order to achieve goals in like manner. Some among us try to understand it in order to describe it, using words. "Lean" is a Rorschach -it means what you think it means.

Steven Spear suggests in his blog that "lean" is less than what Toyota does, and that the term "lean" has come to represent only the tools to improve operations, stating:

"…the issue is not 'getting beyond Toyota.' The issue is getting beyond 'lean' and converging on the full management system Toyota invented, used with such success, as have others–an approach to creating organizations capable of self diagnosis, learning, adaptation, improvement and innovation. Lean, alone, does not make that possible."

Jon Miller, among others, responded by suggesting the opposite, that "lean" must be more than that:

"Commenting on Steven's post, not Jim's e-mail, I would firmly say that the aim should be to "surpass Toyota" and not "surpass lean." The argument of whether we need to refresh the definition of lean is valid but this is not a question of going beyond lean to lean plus, but to rename and expand its boundaries and to pry it away from the dogma of a few. Shared purpose and principles are what we need."

The word "lean" can, of course, be used to mean either - something less than Toyota or something more. I have always found use of the word "lean" to be convenient and, as I think Jon Miller is suggesting, useful. I don't like going into companies and talking on and on about Toyota this and Toyota that ("Toyota is Toyota, we can't BE Toyota, but we can learn from them, etc."). So, for me "lean" has always been a convenient way to talk about "an ideal" that is bigger than just Toyota (though Toyota is our only or best empirical model, so we have to be careful about talking about an "ideal" that doesn't even exist.)

But, to argue the other side, I recall a caution many years ago from Robert Cole (now a professor emeritus at Berkeley, who I mentioned briefly last week - check out his book Managing Quality Fads or his classic Japanese Blue Collar) who warned that whenever you define a term too broadly, you take away any meaning it may have had. It becomes like air. You end up saying it encompasses all of life. It loses meaning. So, I can understand an argument to confine the term "lean" to just the tools.

The thing is, it would be very hard for me to do that. And, as Miller suggested in his reply to Spear, it has always seemed to me to be more productive to simply try to do a better job of defining lean, rather than try to offer an alternative term. I have experimented with different terms. If I talk to you about "lean," you and I both know roughly what we are talking about. But, if we talk about "world-class manufacturing," the discussion immediately becomes so watered down that it's hard to even have a focused conversation ("Oh yes, world-class manufacturing - you mean like GE or Dell, right?").

Hah, you know, the best term for the essence of all this ("this" = Toyota Way, TPS, Lean, WCM, etc.) remains good old "PDCA." PDCA as described at a high level by Deming and operationalized by Toyota.

Nowadays, I talk a lot about the A3 process, as do others, including Durward Sobek, Art Smalley, David Verble, and David Meier. "Problem solving" gets a lot of attention now, often in conjunction with the A3. Jeff Liker has popularized a view of "The Toyota Way." Mike Rother has introduced "Toyota Kata." Spear is introducing the "High-Velocity Organization." Tom Johnson has his "Manage-By-Means," contrasted with "Manage-By-Results," likening TPS to natural systems. Peter Senge and others still work on articulating and developing the "Learning Organization." Doc Hall has his concept of "Compression" (though with Compression, Doc is addressing matters at a little different level...). I think all of these (except maybe Doc's) are simply different ways of expressing and attempting to operationalize PDCA.

And, of course, PDCA is best understood simply as a means of structuring focused, operational learning cycles.

So ...
As has been suggested (don't know who said this first), TPS (or the Toyota Way) is less a matter of what Toyota does and more a matter of who Toyota is. No other company can "BE" Toyota. The point is that through a variety of historical happenstances Toyota as an organization has shined a bright light on the way organizations can function, can make the most of the talents of the people who comprise it, and can respond flexibly to adapt to changing circumstances. Toyota has been an organization that behaves as an organism.

I can't speak for Dr. Womack, but seems to me that he was saying simply that "lean" (whether defined broadly or narrowly) has always been about Toyota. And now it is time for organizations to stop looking at Toyota so much. I don't think Toyota - or Kiichiro or Taiichi Ohno or Mr. Cho or Akio - would disagree with that.

john

John Shook
Senior Advisor, Lean Enterprise Institute

So Long 2009 - Hello 2010!

2010-01-06T06:29:00.000-08:00

Whew, what a year! Most everyone I know is eager to escort the hard times of 2009 out the door in hopes of a more prosperous 2010. While hope has never been a very effective business strategy, I remain optimistic for a good year ahead.

It's been a month since I posted a new column. I did want to let the healthcare column sit there for awhile – not a month, but for a couple of weeks – to see how people would react. Hah – I'll take no credit nor accept any blame for the passage of the two "healthcare reform" bills that occurred in the interim.

I haven't been idle, though! We have big plans for this space going forward. As year's end marks a good time for reflection, I plan to continue the Column and add new functionality, resources, and enlist the help of some friends. Let's review where we've been.

Getting Started
I started this "eColumn" in October 2008 as a dialogue to explore lean management. I wrote in the first column:

"Lean management is not about quick answers, but about going through a thinking process to investigate, analyze, and understand. To try, perhaps to fail, and learn."
In short, lean management is very much about asking questions and trying things, or encouraging others to try things. Lean management itself is not much about providing the right answer but it is very much about asking the right question.

So, what we'll do in this space is just explore. What to expect -- exploring questions. What not to expect -- answers. Here's a great quote that captures the spirit of what I'll aim for:
“The scientific mind does not so much provide the right answers as ask the right questions.”

That quote (from the anthropologist Claude Levi-Strauss) remains the driving spirit of this column.

We decided originally not to call this a "blog" as the term seems to imply two things: frequent postings by the author and an expectation of an ongoing, lively, frequent give and take of questions, comments, and replies. I didn't want to post more than once per week (a cadence that we kept pretty well, excepting this past month) and, more importantly, had no confidence that I would be able to respond promptly to comments and questions.

Eventually, though, I decided to encourage more interaction. I've enjoyed the give and take, and hope you have, too. I want to continue and intensify that aspect of this space in 2010.

From the beginning, this has been a management column, concerned not just with the book Managing to Learn, or with Toyota the company. The first column in fact discussed neither. But, most of the columns have been comprised of either elements of MTL or aspects of management as I learned it at Toyota.

Managing To Learn
MTL has been quite successful as a product. It is in its third printing, received the Shingo Prize for Research, and was reviewed to gratifying praise in corners from the Financial Times, IndustryWeek, to numerous blogs and newsletters including Business Process Trends, Learning about Lean, Training within Industry, Lean Printing, and The Lean Thinker.

The most gratifying words of all came from Toyota Chairman Mr. Fujio Cho, who, praised MTL for "redefining the meaning of 'learning' in organizations." I was delighted, first of all that he even took the time to read it, but also that he chose to focus on the meaning of learning in organizations since that redefinition was an explicit goal for the book from the beginning - translating "organizational learning" into "operational learning" can help organizations and individuals transform high-level ideals into practical gemba-level action

Following publication of the book, last year my long-time colleague from Toyota days, David Verble, partnered with me to create a new two-day Managing To Learn workshop as a means of meeting the demand for the material discussed in the book. Over the course of the year two highly experienced Toyota veterans, Marek Piatkowski and Tracey Richardson, joined us to make the workshop available as a standard LEI monthly public offering and - upon request - on-site at your company. So far, we have offered the course about 15 times and I must say, we have been VERY pleased with the enthusiasm and learning demonstrated by the participants. And, of course, we instructors are learning JUST as much as the students!

But, it's not all good news. Another long-time Toyota veteran colleague - Australian Tony McNaughton - complains that he finds "A3 Madness" has taken over some companies. Ouch. As feared, there have indeed been too many cases of companies that lock onto the A3 as yet another TOM - Tool Of the Month - hammers looking for nails; A3 templates looking for data and solutions. The last thing I wanted from MTL was to find A3s turned into corporate wallpaper alongside outdated SPC charts and unused value-stream maps. I think most companies have so far avoided this malady. Has yours?

Management
The topic of "management, whatever that is" seemed to come to the fore more than ever in 2009. Walking through the business aisle of even "Books a Million" reveals title after title of books on management and leadership. I can't help but think that most of them are no help.

But, some interesting books have appeared in the Lean Community. I featured LEI's Follow the Learner by Sami Bahri in this space and LEI also published Michael Balle's The Lean Manager, which has received broad acclaim as a practical and easy read. My Learning To See co-author Mike Rother, finished his Toyota Kata, completing several years of hard work, which can represent a new door for people to grasp essential dynamics of the lean approach to working and improving. Closer to the end of the year Doc Hall gave us Compression, his rallying call to senior leadership to lead firms to places far beyond the limited scope of today's even most progressive enterprises. I hope Doc takes his "Doc's Cubby Hole" - the informal discussion forum that Doc debuted at AME's annual conference - on the road. Although released in '08, Jeff Liker and Mike Hoseus' comprehensive look at Toyota Culture made quite a well-deserved splash this year.

And more great book news, H. Thomas Johnson's Profit Beyond Measure is available in paperback. It's hard to believe that ten years have passed since first publication of Prof. Johnson's groundbreaking work. The community is finally catching up to his thinking on lean and system sustainability.

Toyota
The lean community's traditional exemplar Toyota stumbled mightily in 2009. In case you missed it, I wrote about "the Crisis and Toyota" shortly before their bad financial numbers began hitting the news over and over.

While the company will probably recover in terms of leadership in industry performance, much damage has been done to its sterling reputation. For a look at how long-lasting poor reputation can be and how difficult to shake, especially in a slow clockspeed industry like autos, read the article by my colleagues Bob Cole and Mike Flynn in the current issue of the California Management Review: Automotive Quality Reputation: Hard to Achieve, Hard to Lose, Still Harder to Win Back, (subscription or purchase required) Cole, Robert E., and Michael S. Flynn.(Bob Cole, by the way, is a long-time sensei of mine, the first American academic to really dive deep inside the auto industry in Japan, working on the plant floor of a supplier back in the 1960s. Long before I even met him, his articles and books were a huge inspiration to me to follow in his footsteps back in the mid 1970s.)

If their analysis is correct, and if Toyota's woes continue much longer, the company may find that the halo effect it has enjoyed (and earned) with the buying public will erode. Check out the following observation from the CEO of China's Geely Automobile, Shufu Li: "Why should I want to be like Toyota? They're losing billions."

Very interesting quote, from a number of standpoints. Betrays an arrogance, for one thing. But, does that make him wrong? What's most interesting about it to me, is that just as Toyota began by copying Ford and GM, Geely began by copying Toyota. And now he's saying that Toyota doesn't even matter.

And so …
John’s Lean Management Column began as an experiment. As year's end marks a good time for reflection such as this, I plan to continue the Column and add new functionality, resources, and enlist the help of some friends. In the works: a "User’s Guide" to assist in creating A3s, a website re-design including the debut of the "A3 Dojo", the (maybe) "The continuing Adventures of Porter & Sanderson." And, of course, questions. Lots of questions.

To quote again from the first column:

Lean management is very much about asking questions and trying things, or encouraging others to try things. Lean management itself is not much about providing the right answer but it is very much about asking the right question.

So asking and exploring questions is what we'll continue to do.

john

John Shook
Senior Advisor, Lean Enterprise Institute

The U.S. Versus the World Healthcare Cost Gap

2009-11-17T07:43:00.000-08:00

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:

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:

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

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

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?")

Medical malpractice lawsuits, with all its associated costs.

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

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.)

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.

A Trip to the Dentist That You’ll Enjoy

2009-11-03T11:53:00.000-08:00

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

Healthcare Value Leaders

Five Missing Pieces in Your Standardized Work, Part 3

2009-10-27T13:30:00.000-07:00

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:

From Kaizen Express, Chapter Four: Toyota calls this the "Fixed Position Stop System." The line does not stop immediately when the worker pulls the cord, rather it continues until it reaches a "fixed position," where it will stop unless the supervisor pulls it again to reset it. Here's how it works. When the worker sees a problem, he or she notifies the supervisor by pulling the cord which illuminates a light on the andon board. The supervisor reacts by speeding immediately (within the worker's job cycle) to the station that is experiencing the problem and makes a set of decisions. The first decision is whether to let the vehicle continue to its "fixed position" at which point the line will stop. That's because if the line stopped immediately, the work of each worker on the line would have been interrupted, causing quality, safety or other problems. So, the work of every worker along the assembly line is tied together, choreographed to start and stop at the same time.

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.

Five Missing Pieces in Your Standardized Work

2009-10-20T12:00:00.000-07:00

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.

Five Missing Pieces in Your Standardized Work (Part 1 of 3)

2009-10-14T15:27:00.000-07:00

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:

Don't confuse standardized work with work standards.

Don't confuse standardization with commonization.

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

Practice, practice, practice...

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.

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:

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.

How NUMMI Changed Its Culture

2009-09-28T10:24:00.000-07:00

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.

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

Was NUMMI a Success?

2009-09-11T09:44:00.000-07:00

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.

You Gotta Have Wa

2009-08-25T06:10:00.000-07:00

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.

A Lean "Teachable Moment": Starbucks in The Wall Street Journal

2009-08-07T08:06:00.000-07:00

I like to keep my consulting relationships quiet. Nothing like a provocative piece on the front page of The Wall Street Journal to blow any quietude out of the water.

This week's Journal featured an article titled: "Latest Starbucks Buzzword: 'Lean' Japanese Techniques." The article referenced me as the 'former Toyota executive who has been advising Starbucks on lean methods." You can also find a free version of the article here.

The blogosphere – the Journal on-line comments space and other websites – is buzzing. Starbucks is a huge flashpoint for bloggers anyway. Many folks hate and many folks love Starbucks. Many folks seem to hold both feelings about the company. Some seem to love hating them.

I won't comment on everything in the article nor will I reply to all the things being said in the blogosphere. But, there are a few matters that call for being set straight, key among them the charges (we've heard this before, from industry after industry as it encounters lean) that lean is nothing more than an efficiency campaign that is indistinguishable from Taylor's scientific management; and, that Starbucks baristas will become robots as Starbucks seeks to equal fast food joints in labor efficiency.

Of course, that is all far from the truth.

The problem with Taylor's Scientific Management: Who is the scientist when it comes to process improvement? Scientists must see real work to do science on the work.

Previously in this space, we've discussed the unscientific nature of most interpretations of Taylor’s scientific management. Those misconceptions seep into the dialogue of even very experienced lean practitioners.

There is a technical side of lean that seeks to make production – all production, all services, all work – flow from beginning to end as efficiently and effectively as possible. Traditional industrial engineering practices – including the ideas of Frederick Taylor – play a critical role in those aspects of lean.

Lean Thinkers (from Toyota Production System developer Taiichi Ohno to MIT lean production research team leader Jim Womack) credit Henry Ford with first establishing flow production, a precursor to the lean enterprise. Henry combined interchangeable parts with the flowing assembly line and showed it to the world. Production hasn’t been the same since.

Toyota then evolved Ford's flow production in two critical ways. First, technically, Toyota figured out (with great benefit for the customer) how to achieve flow production in lower volume, high-variety environments. Ford's flow production worked best when offering only "any color you want as long as it’s black." But, customers eventually demanded more variety. And when faced with the need to respond, Toyota showed us that flow is possible even in complex product mix environments.

Toyota's most radical innovation.

Toyota's second, and most radical, innovation was to answer the central problem that came with Taylor’s Scientific Management: the inhumane treatment of workers doing manual labor. Toyota revolutionized the technical side of lean production with the inclusion of product diversity into the production flow. But more importantly, Toyota revolutionized the social dimension of work, respecting workers brains as well as their hands. So factory workers become knowledge workers.

Toyota combined old IE Scientific Management principles and techniques with social dimensions appropriate for the modern world. Even workers who do "manual labor" with their hands are knowledge workers. Front-line employees become the scientists.

By redefining roles, Toyota changed the answer to the question of who is the scientist in scientific management.

The march of civilization is usually considered to progress from the Agrarian Age (with the Agricultural Revolution) to the Industrial Age (with the Industrial Revolution) to the Information Age (led by the knowledge worker).

So, Starbucks...

It seems that in early stages of embracing lean or any process improvement methodology, practitioners inevitably misunderstand and go through a period of neglecting the social dimension of lean. They try to determine the One Best Way to do work and then deploy (roll out) that Way, in a programmatic way, seeking compliance. What is especially interesting in the Starbucks case is that they can't even HOPE to do that, not with 10,000 stores in North America managed by kids managing part-timers to provide a high-end product and service. So Starbucks is working out a way that could be revolutionary. It leads to a better way of working for baristas that brings even better service for customers. And, oh, by the way, tremendous cost savings can come along, as well.

The way Starbucks has chosen to incorporate this new way of working is revolutionary. Traditional companies too often try to implement lean (or perhaps traditional industrial engineering, or six sigma or process reengineering), in a programmatic way. They do it that programmatic way because … simply because they can. Starbucks, on the other hand, couldn’t approach change on its massive, diverse level in a programmatic, straight-forward, cookie-cutter way. Not and provide the kind of unique, customer-oriented service they want to provide. They had to do it a different way. They have no choice but to do it the right way – through involving the people who do the work.

The comparison with McDonalds is erroneous and misleading. McDonalds very business model seeks a highly cookie cutter approach. Therefore, McDonald's may be successful in implementing traditional Industrial Engineering (Taylorism and all that – not lean) in a very traditional, top-down, programmatic way.

Starbucks decided long ago – and reconfirms this every day – that a cookie-cutter store approach is not the pathway to success for their product, which is a higher-end, higher-priced coffee that emphasizes the customer’s experience. (That is Starbucks’ explicit aspiration. Many people hate Starbucks. Some hate it because it is too upscale, over-priced, and pretentious. Others hate the taste of the coffee, complaining that it is too strong, too weak, too "burnt." Some call Starbucks loyalists with their particular espresso demands "coffee snobs" while there are also extreme coffee connoisseurs who consider Starbucks coffee to be undrinkable swill. You may or may not appreciate Starbucks' aspirations or agree or disagree that it meets them – that is not the point of this discussion.) Each Starbucks store is different. The footprint is different, the customer experience is different. I believe Starbucks wants the customer experience from store to store to be consistent but unique. McDonald’s wants the customer experience to be exactly the same, totally common from store to store.

Starbucks wants the customer to enjoy the experience of being in the store, of interacting with the barista, of hearing the barista call his or her name. Starbucks wants the customer to appreciate the fact that the barista is highly skilled at crafting each drink to perfection and to the customer’s satisfaction.

In each of Starbucks 15,000 or so stores (the gemba or place of work for over 100,000 employees), the next customer to walk in the door may order any of over 80,000 drinks from the nearly infinite available combinations. And then there are those custom drinks, with "quad shots" of espresso (popular with students during final exam week).

Far from becoming robots, 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. That’s what Starbucks wants from its lean initiative.

Instead of barista's having to stop to search for things that are in the wrong place, or aren't there at all, the goal is to make as many things as possible routine so that the barista can spend just a few more seconds talking with the customer. That's the goal. No workarounds due to the line backing up, no short-cuts to get caught up – handling each unique order as it should be handled, in stride, without burden, and to the customer’s satisfaction.

No doubt McDonald's wants its customers to be just as happy, but they want to achieve that by making every experience exactly the same. Therefore, there is no problem with designing the work (with good Industrial Engineering built-in) at headquarters and then rolling that work design out to the masses. In other words, I would argue that McDonald's and the others aren't doing lean, but Industrial Engineering. The technical side of lean without the social side isn’t lean at all.

Starbucks is approaching lean with the intent of providing their baristas with the skills to do better work design on their own, as they go along. This is in total contrast to the uninformed charge that baristas are being made into "robots." If that is what Starbucks wanted, there are easier means to get there than their chosen method of introducing the concepts to each store and asking the baristas to work on their own unique solutions suitable to their own unique situations.

Starbucks and beyond . . .

By the way, the lean transformation Starbucks is pursuing is possible for all service and retail industries. Many service industries – especially healthcare – are discovering the power of lean. But retail is still a state of nature - the way employees have to stock and restock goods, often having the wrong items in stock is a huge opportunity for retailers everywhere. Did you know that, on average, grocery shoppers fill their baskets with what they want only a little over 50% of the time?! Did you realize that a good 20% of the time, your shoe store doesn't have the style or size you need?! Do you remember the last time (this morning for me) you received service that made you want to scream or just roll your eyes?

Back to The Wall Street Journal, all this publicity is probably unfortunate in the sense that Starbucks is still very early in its lean journey. Starbucks is approaching lean the only way it can, and has been very slow and methodical in developing it in a way that fits its Starbucks culture. It is fantastic that as a result of all this Starbucks may be able to provide a great model for other service and retail companies to learn from. But that's a big maybe (underlined, italicized, bold) – it's way too early to tell about that. I’m happy that they're trying and learning.

john

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

Summary of evolution of lean – from Chicago meat packing to Starbucks

Chicago Meat Packing -> Henry Ford -> Toyota -> Starbucks

Chicago Meat Packing and the technical side of lean production -> the disassembly line

Henry Ford and the technical side of lean production -> the assembly line

Toyota -> revolutionized the technical side of lean production with inclusion of product complexity (for customer benefit). More importantly it revolutionized the social dimension, respecting workers brains as well as their hands (so factory workers become knowledge workers, the scientists).

Managing to Pitch with PDCA (Pitch-Defend-Catch-Adjust)

2009-07-28T18:13:00.000-07:00

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:

"Simply stated, the best pitchers are the best learners. Whereas just about everyone in baseball gives and receives advice, the best learners are eager listeners. They know how to evaluate what they hear, and then how to integrate the appropriate advice into behavior. The best learners know that failure, as Henry Ford put it, 'is the opportunity to begin again more intelligently.' The best learners instinctively recognize that experience by itself is valueless. What one does with it gives it value."

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.

Recruiting Creative Ideas

2009-07-16T09:41:00.000-07:00

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.

Managing To Learn in Sloan Management Review

2009-07-07T05:11:00.000-07:00

You will want to read two articles in the current issue of the MIT Sloan Management Review.

My article (Toyota's Secret: The A3 Report) is a simple summary of Managing To Learn, summarized as well as I could in only four pages, only about a page of which is text. (Forgive the title – publisher's prerogative …) SMR editor-in-chief Michael Hopkins introduces MTL:

"In his book Managing to Learn, John Shook deconstructs the problem-solving journey of one manager and his mentor, and the management mechanism that guided them. The backstory? Shook knows the journey firsthand."
But, more interesting than my piece is Hopkins' own article, "Problem-Solving by Design." Hopkins does a fantastic job of putting the A3 process into contemporary management context, while introducing MTL to a broader audience. As Hopkins says:

“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.

GM Is Bankrupt: Does That Mean GM Managers Are Bad Managers?

2009-06-30T08:15:00.000-07:00

I suppose, by one definition, the answer to that question would have to be yes.

But, in my experience, GM managers have usually been very good managers, frequently outstanding ones.

Their reputation today, however, is as something of a laughing stock, with ousted Chairman Rick Wagoner the global poster boy for American exec ineptitude.

In this column you've met my friend Lou Farinola. You will probably never meet a more capable manager. Lou likes to have – as he puts it – a "lot on his plate." He could capably manage a huge amount of work being performed by people all around him as he managed down, sideways, and even up.

What's the "truth" about GM managers in general – good managers or bad? Somewhere in between? I suppose you could think if it that way. But, "somewhere in between" is not a very satisfying conclusion. Rather, no doubt both views express truth (that's not the same as "somewhere in between"). They are simply looking at it from different angles, at times seeing different aspects, interpreting similar aspects in different ways in others. Certainly, the question begs the more basic question of, what is a "good manager?"

One valid observation is that GM managers are outstanding executers. They may be less than outstanding at setting strategic direction.

It could be that setting strategic direction in the auto industry hasn't been a core competency since Henry set the industry in one direction and Sloan – building on Henry’s foundation – came along and trumped him later. Toyota then trumped Sloan, but I don't know that their strategic direction was so exemplary – it was just better, and their ability to execute even better than that.

I only met Wagoner once, briefly and had no personal conversation with him. I had a chance to spend a great day visiting suppliers (touring in the corporate Gulfstream) with his predecessor Jack Smith. I think it's hard to fault the direction Jack Smith set during his tenure at a critical time in GM's history. I suppose you could say he should have been more radical, should have tossed more hand grenades into the bureaucratic morass that was GM HQ. More shock therapy to get unstuck. But, the changes he set in motion were directionally correct.

It's much easier to criticize Jack's predecessor Roger Smith. Though, it may have been less a matter of him personally than it was the times. Roger Smith was – evidently – a very smart and capable GM executive. A finance guy, as most of GM CEOs have been. (Why must publically held American companies always insist on installing finance people to run companies that are operational in nature??) And he saw that GM was in trouble. And he tried to do something about it. He tried several "experiments." The problem was, GM – as most companies – didn't know what to do with the experiments. The experiments either completely failed (reorganization, excessive investment in unproven automation) or succeeded in the narrow sense but failed in the sense that the company didn't know what to do with the success (NUMMI, Saturn).

Back to Wagoner, who was by most accounts a very smart and capable manager, well-respected to this day by almost everyone who worked with him (not as idolized as Jack Smith, but respected). My biggest problem with him was that he always, always stated that the course was correct and all the company has to do was stay the course. When he took over as CEO, the company was so very clearly in trouble (despite the progress Jack Smith had brought), yet his very first statement as CEO was that, "the company is doing great, we have a great plan, everything is great – we will stay the course ... "

To the end of his tenure, that was his line. To some extent, I suppose, a chief exec has to speak the party line. But, as chief exec, he must not only speak the party line himself, but determine the line that others must speak. Not just toe the line but also lay the line that others will tow.

Long ago, I set 1971 as GM's peak year. Metric-wise, 1977 was the peak year in production and sales. Steady decline since then. But, I believe 1971 was the real peak of GM as the industry leader. That year marked the beginning of the end. Momentum carried it through another five years of growth, but the long decline had started.

Brian Miller (lead translator of Birth of Lean) and I share a fondness for British historian Arnold Toynbee’s observation that the Egyptian empire was in decline for 4000 years. 4000 years of decline means there were still plenty of good times to be had, even after the decline had started.

In GM's case, 40 years of decline.

What about Toyota? Has their decline started? Will they be able to regain what they had? (See: What’s Your Challenge, and You Forgot about Overproduction)

I've seen, we've all seen, GM make lots of bad major decisions over the stretch of the past three or four decades. I’m suggesting that those poor decisions – made by senior managers – should not brand all GM managers (or engineers or anyone else) as incompetent.

Recently, two of the horrible decisions from GM’s not-so-distant past threatened déjà vu. Detroit newspapers and radio have been up in arms that GM may:

- Move from the Renaissance Center, after moving in just a few years ago at a cost of over half a billion dollars.

- Partner with Fiat again, after just a very few years ago losing between two and three billion dollars.

Those kinds of things happened with regularity around declining GM. Bad decisions on top of crazy ones.

And now bankruptcy.

But, as I travel around and visit companies that have taken on mid-career GM managers, those ex-GM (or Delphi) managers are – almost without exception – stars in their adopted environments. The companies that hired them are happy. And the ex-GM people themselves are giddy, having a blast being turned loose to use their talents to tackle fresh challenges.

And I recall well the observations of the senior Toyota managers back at the time of the NUMMI start-up 25 years ago. Toyota managers worked alongside GM managers to make the project a success, or negotiated against them across the table. Either way, in many instances, my Toyota seniors would remark to me after meetings that, "I don't get it. GM managers are incredibly capable", an observation that would always be followed by a question, "Why is it that GM as a company has so many problems?"

I couldn't answer that question back then. I would shrug and say, "good question…" And while there are many devils in the details, one observation I can make regarding the question today is that sometime, somewhere along the way, GM's management system became poisoned. Poisoned with narrow-thinking, narrow focus on functional silos, narrowly defined ROI and focus on results.

In a bad management system, even good managers will make bad decisions.

John

John Shook
Senior Advisor
Lean Enterprise Institute, Inc.

Is Your Technical Person a Technical Problem or a People Problem ...?

2009-05-28T05:52:00.000-07:00

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.

3. Why was it not lubricated sufficiently?

The lubrication pump was not pumping sufficiently.

4. Why was it not pumping sufficiently?

The shaft of the pump was worn and rattling.

5. Why was the shaft worn out?

There was no strainer attached and metal scrap got in.

If you've read this simple example closely you've recognized that Ohno could have easily taken the why exploration even deeper. "Why was no strainer attached?" He stopped, no doubt, to illustrate FIVE whys, but also because he traced the cause to its root technical cause. So, that's deep enough to develop a direct and clear technical countermeasure -- an actionable point of cause.

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.

Weighing in on Balance

2009-05-18T14:34:00.000-07:00

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.

Forward to Fundamentals Redux – Kaizen Express

2009-05-05T08:35:00.000-07:00

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.

Forward to Fundamentals

2009-04-22T08:33:00.000-07:00

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.

Thinking About Buffers and Production Systems (Birth of Lean Chapter IV – "The Evolution of Buffers at Toyota" – Kaneyoshi Kusunoki )

2009-04-14T08:59:00.000-07:00

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.

Michikazu Tanaka of Daihatsu on “What I Learned from Taiichi Ohno”

2009-04-08T09:12:00.000-07:00

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.

Purpose, Process, People

2009-03-30T06:09:00.000-07:00

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.

And You Forgot About Overproduction

2009-03-23T05:07:00.000-07:00

Times of crisis and chaos are when markets realign. Companies will go out of business and market shares will transform much more quickly and radically during a true crisis than is ordinarily possible. This is when lean companies will take advantage of the turbulence to strengthen their position. This is when the truly critical principles of lean thinking come to the fore.

Crisis and basics, basics and overproduction
In the rush to meet the demand of some extraordinary boom periods of the past decade and a half – the dot.com boom, the China phenomenon, the loose credit of the sub prime mortgage debacle – perhaps the most basic principle of lean thinking has been overlooked. As the various forces of the past decade have added capacity around the world, what’s been lost has been attention to the waste of overproduction.

In the excitement of all that rush to add capacity, to keep up with hoped-for demand, to stay ahead, where was consideration of the most basic of TPS principles? Where was overproduction?

Remember when you first heard about overproduction? Surely you didn't get it right away. Did you? After all, "overproduction" is a bit of a funny term. Of course, you don’t want to make more than you need, so what’s the big deal?

Honestly, it took me a long time. I can't remember exactly when the light went on. Perhaps more than a particular "aha" moment, it was a matter of little by little.

The seven wastes and the company that kaizened them
Some years ago I had the pleasure of working and learning with a company that made quick progress immediately upon starting its lean initiative in manufacturing. The leaders learned the various TPS basics, including the seven wastes and all the rest. Well, not “all.” Among the things they learned included the principle of doing more with less. And eliminating waste.

In their early enthusiasm to apply the thinking to everything, they quickly decided that, since less is more, six must be better than seven, and they decided to “kaizen” – to eliminate – one of the seven wastes. Interestingly, of the seven, they chose … overproduction.

In addition to learning that less is better, they also took a close look at the seven wastes and decided that the concept of "overproduction" was covered perfectly well by the waste of "inventory." And, yes, certainly overproduction results in inventory, so if we focus on eliminating inventory we will also eliminate overproduction. Two birds with one stone, so to speak.

I’ve encountered many companies that have added an eighth or even ninth waste (usually something around waste of human potential, sometimes "time" or "environment"), but this was the only time I’ve seen a company specifically decide to reduce the number (though I have seen companies abandon consideration of ALL the wastes). And it’s fascinating that, of all the wastes, they decided on overproduction as the waste to eliminate from their list of wastes.

Rethinking Overproduction
But, you know that overproduction is a waste not just because it creates wasteful inventory. Right? They are actually very different things. Related, of course, but very different. Right?

Here’s a basic idea: The key to building a system that thoroughly eliminates the sources of all waste is to eliminate overproduction.

The processes and practices of lean thinking align around objectives which are designed to prevent overproduction. That’s how a lean company shortens the lead time to provide products and services for customers. Being mindful of avoiding overproduction creates flexibility and generates cash, which in turn provides value for customers and prosperity for companies.

Ohno made the seven wastes famous, of course, but in later days he talked about regretting it. There was never anything magical about the number seven. Rather, the types of wastes are many and no matter how you strive to eliminate them, you will surely be left with traces of those seven. And to thoroughly eliminate those seven, you will surely have to thoroughly change your production system. And the key to building a system to thoroughly eliminate the sources of all waste can be found in the path to eliminate overproduction.

Overproduction never meant just "not making too much" any more than "pull system" meant just "going to get what you need when you want it." Overproduction means aligning supply with demand, to get the "right item in the right amount with the right timing". That means knowing your demand, really, really well. It also means knowing your "supply", your capacity, your capability really, really well. And that's how the JIT tools help you, they help you get to know your real demand and real capability deeply thereby enabling you to work to steadily align them. That’s hard today, with currently installed capacity, and even harder tomorrow, with capacity that’s still under consideration to meet demand that, at the end of the day, will vary.

I'm suggesting that most companies, even "lean" companies, forgot about overproduction over the past few years. Maybe your company is different, but honestly, I never hear anyone talk about overproduction anymore. Or, not until very recently when companies suddenly found themselves with huge capacity and inventory problems.

Not only do people not talk about it anymore, they don’t focus on it anymore when designing their operating systems. Or when they set their operating patterns. Or when they capacitize – when they hire employees and purchase equipment.

Et tu, Toyota?
Even Toyota, you know, seems to have forgotten about overproduction. It's my guess that they are reminding themselves – or were reminded by circumstances (facts, gemba, genchi gembutsu, reality) – in no uncertain terms today. The photos of Toyota vehicles at the docks and reports of growing inventory of completed vehicles tell part of the story. Stories from suppliers of "Big Three style" ordering patterns were even more disturbing to me. The steady replacement of simple old card Kanban with e-Kanban has also makes me very uneasy (maybe I’m just old-fashioned).

What about you? What about your company?
Maybe we can do a little sharing here. There are different ways of raising or re-raising consciousness, ways that should begin on the plant floor ("better to act your way to a new way of thinking…"). But, perhaps the best way we can play our part here in this space is to share experiences. Did your company forget about overproduction? Did it ever focus on overproduction? (I’m saying most didn’t.) Is overproduction understood at your company?

John
John Shook
Senior Advisor, Lean Enterprise Institute, Inc.

Back to Basics at the Lean Transformation Summit

2009-03-11T14:58:00.001-07:00

It was good to see the 300 or so of you who attended the 3rd Lean Transformation Summit last week in Atlanta. Conferences can be a good time to learn and network, also to take the pulse of the community.

Back to Basics
A major theme of the conference and subject of much discussion was "Back to the Basics," a favorite theme of this Column as well.

If the basics are something to go back to, what does a quick review of lean history tell us? Dr. Womack’s familiar history lesson goes like this:

1935 – 1975 Invention/Innovation
1975 – 1990 Age of Global Discovery
1990 – 2006 Tool Age
2006 – ?? Age of Management

Those beginning and ending years are all approximates, of course. 1935 to 1975 refers to the period Toyota was researching and building cars while concurrently learning and building its operating systems. (And, of course, there is a “prehistoric era” during which many innovations such as those of Henry Ford led up to Toyota’s development of its production and management systems.)

1975 to 1990 refers to the period the world outside Toyota began to discover what the company had been doing, beginning with the first oil shock of 1973 and the initial visits of foreign emissaries to Toyota City in the late 70s and early 80s. 1990 to 2006 refers to the era when everyone, every company was copying Toyota’s tools and techniques, resulting in a fashion boom of "Your Company's Production System".

So now we are – perhaps - entering the "Age of Management." It is certainly clear that that general dialogue and concern in recent years has turned toward more managerial and cultural matters. And there now seems to be widespread acceptance (on the surface anyway) of the wonderfully insightful explanation by Toyota’s Teruyuki Minoura that the T of TPS should refer to "Thinking." It's a "thinking" production system in which all members are fully engaged with their minds as well as their hands. I myself have long pointed out the lack of understanding of those matters as a major problem for many if not most if not all companies. Nowadays, no one even wants to talk about the tools anymore.

Uncommon Sense
But, something is starting to feel a bit out of whack again. So let's go back and examine some basic assumptions.

Common sense (basic assumptions) then. In the tool age, the belief was that if you use these tools, you too can be like Toyota. Buy the shoes and be like Mike.

Common sense (basic assumptions) now. Copying tools is wrong. Focusing on tools is wrong. Copying anything is wrong and you certainly can’t copy management, culture, and thinking. You have to adapt to your own circumstance, solve your own problems, develop your own "culture".

Sounds good, right? But, there could be a problem. Consider this quote:

"Common sense is always wrong."

And consider the source. It was a frequent expression of Taiichi Ohno. Hmm, maybe it"s worth going back and questioning our basic assumptions, even now.

As we turn attention to management, strategy, people, culture, and move from the "tool age" to the "management age," it's possible to forget the genius inside the highly-developed lean "tools." Properly developed and implemented, they embody the thinking and diligent practice that can lead to the deeper learning and change in thinking. Through proper, thoughtful implementation, repeated practice of the lean basics can bring insights.

Even more than the "mechanical" or tangible benefits they bring, they are intended to be learning and improvement structures, designed to make it:

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.