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Highlights from the Lean Transformation Summit 2015, Day 2

by Tom Ehrenfeld & Lex Schroeder
March 5, 2015

Highlights from the Lean Transformation Summit 2015, Day 2

by Tom Ehrenfeld & Lex Schroeder
March 5, 2015 | Comments (0)

We'll be live blogging and posting reflections from LEI's 2015 Lean Transformation Summit today in New Orleans. Read yesterday's blog hereview the complete Summit agenda, and stay tuned throughout the day as we share highlights from Summit talks and learning sessions. 

Read on for thoughts on yesterday's closing session with Jim Womack and Mark Reich. Then first up TODAY, we'll be hearing from two companies about their lean transformation stories and lean learning: Kroger and Menlo Innovations. Check back here again in a couple of hours as we add to this post and if you're on Twitter, follow live updates and photos at #lean15!

7:30am

Looking back at Womack and Reich's conversation on the Future of Lean, by Lex Schroeder

After learning sessions wrapped up yesterday, we ended the day with a conversation on the Future of Lean with Lean Enterprise Institute Founder and co-author of Lean Thinking, Jim Womack, and LEI's COO and Toyota veteran, Mark Reich.

Womack brought us up to date by reflecting on the origins of the word lean, reminding us how fellow researcher John Krafcik coined the term and how together, their research team in the 1980s agreed they should name this way of thinking after what it DOES in organizations, which is make things "leaner". "Organizations become able to do more with less or much more with the same amount of resources." With all of the enthusiasm around lean (certainly not a bad thing), Womack asked us to remember that the customer really doesn't care about organizational INPUTS (how much hoshin or kaizen you do in the spirit of lean, for example); the customer cares about OUTPUTS, the product. In our haste to do better by customers and clients and community members, it's easy to get caught up in the former though, isn't it?

Reflecting on the growth of the lean movement over time, Womack shared how early on, a lot of consultants went in and unfortunately "did lean to people." This allowed for short-term wins in many cases, but it was never the intention. Instead, the goal with lean (then or now) is rethink management altogether. For organizations, he said, it's about asking the question, "How do you organize and align people in the most productive way?" It requires whole enterprise transformation and means replacing traditional management with something very different.

If we're going to create organizational alignment and replace traditional management techniques with lean thinking, well then we're going to need a transformation model, Womack says to help us move forward. (This could be the Lean Transformation Model video you saw yesterday here at the Summit). And still, "understanding how the system works inside Toyota is an important first step."

Next, LEI's COO Mark Reich reflected on his training at Toyota and how this informs his thoughts on the future of lean. Having had the experience of learning directly from a sensei at Toyota, Reich shared with us how success with lean is really driven by culture. "Line managers have to take responsibility for developing people or it doesn't work," he says. For leaders at all levels, it's about asking, "How do I build the capability of the team member? What development path is needed?" At the organizational level, it's about developing organizational capability, not just growth and making bigger profits in the short-term, but being able to move forward well into the future. It's about challenging people and getting them to think about the value their organization provides and the value they provide to the organization. For lean leaders, it means asking the question, "How do we make people feel like the value they add makes a contribution to the world?"

On lean versus traditional management, Mark said the days of the manager who says, "Here's an assignment, go figure it out and come back to me" are gone. Managers actually need to go to gemba - the place where value creating works gets done - and learn about the work, teaching team members how to problem solve and improve the work. It doesn't mean you babysit anyone, but it does mean understanding how to build capability and be an effective coach when the team member is struggling.

The Q&A was a far ranging conversation, not just on how to do lean better, but about how a lean approach to work can improve the health of the economy and larger society. More to come on these themes later.

Stay tuned for more posts from today's sessions!

 

9:00am

Lean in Aisle 3, by Tom Ehrenfeld

Kroger leaders just shared acompelling story of lean practice at one of the world’s leading grocery companies. They spoke in language that many others at this summit have also shared: creating a problem-solving culture, building trust, engaging the people doing the work, and learning as leaders how to support this work.

Jim Womack kicked off their talk by reminding the audience that many decades ago Taichi Ohno recognized the potential of supermarkets to be a lean laboratory. Ohno realized the need for Toyota to better regulate flow, to move from unnecessary bufters to a just-in-time system, one where a downstream process would trigger immediate replenishment of parts. He recommended that folks read Ohno’s writings on this in Workplace Management.

He cited experiments by companies such as 7-11 and Tesco, saying, “The work of the lean movement in the last 30 years has been to make the work of the world’s supermarkets work in the way that Ohno thought they should.”

Two years ago SVP Marnette Perry called two years ago to ask how they can learn from Toyota. Says Womack, “They had a new different better idea, which was rather than starting at the top with a grand program start at the bottom with the people doing the work.” They were serious about looking at the struggles of the real people doing the real work.

Marnette says that Kroger today is a company that is learning new skills—learning to ask rather than tell, to embrace problems and say that they are okay. The gaps, the problems, they face are certainly not minor. The company was formed by many mergers and still works hard to operate as locally as possible, with local pride and local identity. This creates huge pressures in areas such as upstream product flow at 37 manufacturing facilities and 30 distribution centers.

While Marnette teed up many specific operational challenges facing Kroger; the big takeaways from her talk were the significant cultural changes that have occurred through practice—key among them a shift towards embracing problems, leading by coaching, and putting grit into the value of supporting associates.

“As we get lean that creates a compelling urgency to solve legacy inefficiencies that we have.” One of the most impressive tangible results boosted by lean work has been a radical improvement in customer wait time. Through associate engagement, predictive analytics, and a heat-sensored customer tracking approach, they have reduced the wait time for customers from 4 minutes to 30 seconds—at in 2619 stores.

“Our challenge today is how do we scale the learning—from small efforts across the company.”

At Kroger, says Marnette, “Lean gets us closer to the customer and to our associates.” Their goals are to raise associate engagement, lower cost, build capability, increase capability, and take all four of those to reinvest them back in the customer. And, “At the end of the day it was never simple. And for us lean was never simple. It was not easy to do but it simplifies the business.”

What does simplicity boil down to? “It creates a culture to see waste and improve the work. And employees learn how to problem-solve.” Moreover, says Marnette, she says “the how to do it always begins with listening watching and understanding the real work—and then embracing problems as if they are okay.” 

Her personal journey began with Jim Womack challenging her (gee, Womack having a strong opinion?) to rethink the purpose of lean. She shared with Womack that her problem was finding a way to work with employee costs and process improvement. Womack said “what about your inventory?” She initially resisted, and continued to resist, until finally, after repeated challenges, she says a light bulb went off. Womack was pushing her to rethink inventory in order to practice root cause thinking.

The problem at Kroger to tee up was in fact waste. Inventory is a huge driver of cost in the system. And the real challenge for this work was: “How are we going to use your people to attack the problem?” 

Over time, as lean got traction at a model line, Marnette says Kroger went through a change in thinking. The company has a history of swinging for the fences, of coming up with large broad solutions: kaizen on chaos. “We have come to realize the limitations of that approach,” she says, the fact that this approach only gets incremental improvements. “Success is so much bigger when we stop swinging for the fences,” she says. She and her team are now focused on building problem-solving capability and practicing system thinking—using lean to look at waste and real work. 

Her colleague Jeff Abate elaborated on the results of this practice. He showed how they are experimenting with the roles of supervision and store managers, learning how to remove waste. “To achieve really big results we have to improve the work of our own associates,” he says. Continuing on that he says that for Kroger, respect for people is about helping associates. “We are focused on improving the stuff they spend most of their time doing.”

I’ll sum up with a quote from Marnette: “Our people are our teachers. And lean is helping us see things differently: to see our people through a different lens. And the capacity we need to serve our growth is right there in our hands.”

 

9:45am

Rich Sheridan on the Usefulness of Joy, by Lex Schroeder

I'm glad to share a few thoughts on Rich Sheridan's talk this morning. Some talks start by focusing on lean and end there, offering helpful insights and stories about how to teach lean thinking more effectively or how lean has helped organizations make things better. But Sheridan comes to lean and lean concepts like problem solving and coaching and collaboration - and even set-based experimentation in product development - from a totally different angle. For Sheridan and his leadership team at the software company Menlo Innovations, it's about joy and connection and human relationships between team members. Those things are the foundation for lean thinking, making way for organizations to truly become learning organizations. Conversely, lean thinking makes all of these things - joy, connection, healthy relationships, learning at all levels - more possible. 

So all of this sounds good, but how do you actually make way for more connection and joy? For Menlo, it's about how the office is set up, encouraging folks to work in rotating pairs; it's about morning "daily stand-up" circle meeting with a talking piece in which everyone has a chance to talk and update the team on their work and problems without it feeling like a stuffy "report out"; it's about allowing people to be human, Rich says (showing a video about what this all looks in practice). It means thinking about communication seriously and facilitating communication among and across teams and giving time to this. The result, Sheridan tells us, is more frequent and open collaboration. People build in quality by sharing the right information at the right time to the right people in a way that improves products and processes. More people go and see the work, more people ask questions and actively problem solve.

At the core of everything and certainly Menlo's workplace culture, Sheridan says, is trust. "Trust your people to run experiments," he says. If you're a leader, he says, "Your job is to pump fear and ambiguity out of the room by bringing problems out into the open." And... create enough organizational rigor and supportive structure to create the flexibility you need for a more open, collaborative, experiment-driven culture to even take place. The two go hand in hand. 

What did you think of Rich's presentation? Let us know in the comments below.

 

2:30pm

Connecting the Dots Between Lean Thinking and Lean User Design

Will Evans, Professor of Design Thinking at NYU and product designer, ran a learning session this afternoon, "Designing Experiments Using Lean UX". He began by asking, "How many are familiar with LPPD (Lean Product and Process Development)? How many of you are responsible for process? responsible for product? The room was split about 50/50, and - I didn't expect this - was a bit heavier on the process side. Topics covered in this session apply to both... learning cycles; the difference between sense making and knowing; designing your first experiment, "bullshit detection", experimental design, and more.

Evans started off by showing connections/differences between various lean communities to get clear on different kinds of learning cycles and when to use them. Most of the lean community focuses on PDCA. In the software community, Steve Blank simplified this to Build, Measure, Learn - a learning cycle that got popularized in lean startup movement. Think of this is a simplified/watered down version of PDCA, Evans says, but it's important to note that this BML cycle has had a big influence lean user experience design (Lean UX). What's Lean UX? User experience design, usually in agile teams, that's about understanding how to reduce cycles, formulate hypotheses, and learning in a way that "you don’t make massive bets" in designing products. "It’s about not wasting time building products nobody wants... or building products for a long time only to have leadership team change course last minute (without you getting a chance to release any value)." It’s about moving from the language of requirements - which at the end of the day are mostly guesses - and understanding how to work in uncertainty.

One major difference between manufacturing and software design (and development... and release), Evans says, is that manufacturing is typically a closed, deterministic system and software/other fields are more open and complex. What does this mean for lean thinkers/designers in software and non-manufacturing industries? You want to think about experiments a bit differently. You need to figure out how create strong learning cycles. You need to understand how to generate and test hypotheses and examine your assumptions upfront in order to reduce learning cycle time. Along these lines, A3 thinking, Evans says, is great for a team member and their coach in a relatively closed, deterministic system (when you have one person solving a problem with one coach). In software design it's different because usually you're working in teams in open systems. More on how to navigate uncertainty - This requires sense making. One way you make way for this is by doing what the lean startup community calls “getting out of the building”. All with the goal of creating value. And then understanding how to design small in experiments in such a way that you're getting at the shared understanding among your team about your product and your customer that's WRONG. 

Ok, how do you take this stuff back to work? Ask, what can you learn this from your customers soon, say, this afternoon, by putting something in front of them quickly, then quickly sharing that info with your team. Then it's about finding ways to figure out: "How do we know what we know? How do we get at what we don’t know? "Getting clear on assumptions isn’t so much about getting rid of uncertainty, but acknowledging it exists," Evans says. Large, established orgs sometimes struggle with this. A lot of companies don’t realize there’s usually a massive gap between what they planned, say, 24 months ago and what goes out to the customer or should go out to the customer. Running experiments is about creating options in the problem space and solution space. "This is not about 'validating learning'" Evans says. "It's finding out where our assumptions are/were wrong because that’s where learning happens."

On how to generate a good hypothesis statement and experiment, Evans offers this template: "We believe by doing THIS for THESE PEOPLE/THIS PROCESS will achieve THIS MEASURABLE OUTCOME. And when it fails/succeeds, we will DO THIS." Then you keep developing design options, evaluating and sharing findings. Evans offered an experimental design canvas template to help guide your experiments. There was a lot more to this talk, but this gives you a feel for the whole. The talk ended with Lean Coffee, a quick way of having collaborative, agendaless, problem-solving oriented conversations, which interestingly, Jim Benson fellow #Lean15 presenter, is responsible for co-creating.

Let us know your thoughts below. We've only managed to get up our thoughts on 2 learning sessions this week, so we'd love to hear about the other 7 learning sessions you all attended here as well! Let us know what you learned in the comments.

 

3:30pm

Lean15 Attendees Live Tweet John Shook's closing keynote

 

 LEI's Lean Transformation Model is about helping leaders and organizations learn to ask the right questions. -John Shook
@WiebeNijdam  John Shook #lean15 Each person has the right to be the company expert in something!

 Shook: Does each person know their specific problem to solve?
 Does everyone know their value to create? Shook
Want to be a LEAN organization? Quit copying other people's solutions. You need YOUR solutions to YOUR problems.
@lizasize  Purpose and problems... "What's your problem to solve...?" #lean15
 "We shall build good ships here. At a profit - if we can. At a loss - if we must. But always good ships." -Collis Huntington
 "It's easier to ACT your way to a new way of thinking then to THINK your way to a new of acting." John Shook on practice

 RT : "It's easier to ACT your way to a new way of thinking then to THINK your way to a new of acting." John Shook
 It is easier to act your way to a new way of thinking than to think your way to a new way of acting - John Shook
 "We all need to become greater experts in problem solving & in developing problem solvers. You start by developing yourself" Shook
 It's called lean thinking for a reason, not lean process improvement - John Shook provoking us to think
 Transformation is both organizational and personal: step back, bring your slow thinking brain & don't just be a solution provider.
 Leaders must shift from providing solutions to be a dispassionate investigator & passionate advocate - Shook on personal transformation

"LEI's is about helping leaders and orgs learn to ask the right questions" (John Shook) via
 Shook: "Everybody in an organization has the right to know more about something than anyone else."
has first volunteer day!

 

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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