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What Finance Teams Can Learn from the Lean Practice of ‘Go See, Ask Why, Show Respect’ - Part 1

by Mike De Luca
October 15, 2020

What Finance Teams Can Learn from the Lean Practice of ‘Go See, Ask Why, Show Respect’ - Part 1

by Mike De Luca
October 15, 2020 | Comments (0)

This is the first of two articles about lean thinking & practice for Finance and Accounting professionals. They are excerpted and adapted from the upcoming book Practicing Lean Accounting by Mike De Luca and Nick Katko, to be published in early 2021.

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Over the past few years, I’ve had the privilege to guide groups of finance leaders through a one-day gemba-based workshop designed for them to learn to see the potential and real impacts of successful lean thinking on financial outcomes. I’m sharing here a composite story drawn from some of my more recent workshops, which highlights what Finance leaders can gain by adopting the practice.

The workshop setting is a manufacturing firm (although this is equally applicable in service and other industries), and the participants were the finance leadership team and internal lean coaches. We spent most of the day on gemba walks – going to see manufacturing operations and, just as importantly, accounting operations.

“Go See” to Better Understand how Lean Improvements Impact Financial Results

After discussing the lean concepts of value and waste and how to apply the practice of “go see,” we took our first gemba walk to the shop floor. We followed the manufacturing process of one of their primary products, from raw materials to finished goods. At the end of walking the process, we had our discussion around the team’s visual board--where it posted the metrics they used to understand how effective the process was in terms of outcomes such as safety, quality, delivery (timeliness/efficiency), cost and morale.

The finance leaders had undoubtedly been to the shop floor before, and they had a good relationship with the operations leaders, but this was the first time they walked a specific process from end to end and discussed the team’s improvement board with them. The gemba walk helped the finance leaders not only gain an in-depth understanding of the issues the production team faced; they also learned and saw the effectiveness of the lean practices that enable continuous improvement.

They learned about the gaps the team was working to close in terms of improving the lead time – this product had had a lead time of 9 months before bringing lean thinking to the team, while the active and value-added times were a small fraction of that. They saw first-hand the quality issues in the input materials that caused delays and rework during the assembly process (for which, of course, the finance leaders were immediately doing mental math on the cost implications). Most importantly, they saw how the team and local leader were making these problems and opportunities visible both on the shop floor (defects and rework had a delineated space out in the open for everyone to see and quantify as a process measure) and on the team’s visual board (performance trends were clearly shown and gaps to target were called out with red highlighting). Leaders saw how employees were engaged in understanding the causes of the wastes, coming up with different things to try in addressing the causes, and measuring the impacts of their “experiments.”

Additionally, the finance leaders had an “a-ha” moment when they asked about a large area where materials were stored. They learned that the company had decided to outsource a portion of the assembly, and these many palettes of boxes were the purchased parts waiting to be used. They then learned that the on-site team had the capabilities and equipment to make these parts in-house and, furthermore, that they also had capacity to do this without adding staff or overtime.

After a short time of trying to piece together how the decision had been made to outsource in the first place, they turned their attention to what they could do differently in the future. They decided to rotate finance leaders attending manufacturing huddles and team meetings on a regular schedule so they’d be aware of the internal team's capacity and capabilities, and invite an operations representative to participate in all make-buy assessments.

“Go See” to Learn about and Pursue Improvements in Finance and Accounting Processes

After debriefing the “go-see” of the manufacturing process, we transitioned to the building where the accounting department was located to “walk” one of the accounting processes – customer billing. The leadership team split up so each one could sit with a billing specialist and observe their work as they produced a customer bill. Of course, these leaders knew the billing team well, saw them frequently, and discussed their work, but this was the first time they had observed one of their processes in real time.

Billing specialists had the opportunity to walk each leader through preparing a specific customer bill. Each bill was a combination of one-time charges for finished products and/or parts and on-going fees for maintenance contracts, which were variable and calculated based on the number of finished products the customer had purchased and their utilization of each one. Like many of our accounting processes, observing this one revealed complexities that, in some cases, leaders weren’t aware of and which billing specialists accepted as the reality of the work. Many process wastes were apparent throughout the process, and since the leaders and employees were learning about process waste, they were able to identify examples and start to think about opportunities to improve the process. Examples included:

  • waiting for monthly machine utilization data to inform the maintenance fee portion of the bill,
  • variability in customer contract language that required extra processing with each customer to ensure that their bill adhered to their specific contract terms, and
  • a lack of clarity in contract language which required extra processing to insure alignment with the intent of the contract.

Within the billing specialists’ control were various forms of motion, transportation, and additional extra-processing waste.

Invariably when we shadow leaders in observing their employees perform daily work, they remark in debriefing afterward on the variety and extent of the wastes they became aware of. In this case, both leaders and billing specialists came away from the day with a list of improvement ideas, some of which they could implement quickly and others that would require more planning and, in some cases, the involvement of others outside the team.

The manufacturing floor had a visual board where they made their problems visible, worked on them, and showed their progress using data. The accounting team didn’t. A visual board would be one important enhancement in the lean thinking practice for this team--a way to make problems and opportunities visible once we become aware of them, and a shared visual workspace where leaders can also "go see," check, and coach.

I have many other similar stories, from my own experience as a finance leader and my experience as a coach. The point of these experiences is that until we incorporate “go see” into our lean practice consistently, intentionally, authentically, and honestly, we’ll fail to learn what we need to make meaningful and sustainable improvements. We risk believing that the employee is at fault for the problem and not understanding how the process or system is either not setting them up to be successful, or in many cases, actively getting in their way and impeding their success. We miss the opportunity to learn from and with the people who do the work what is actually causing the impediment so we can address it together.

Keywords:  accounting,  gemba
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