Follow-up Webinar Q&A with Jim Lancaster, Lantech CEO and author of the Work of Management
"The Real Work of Management" webinar drew an engaged audience that wanted to know more about the daily management system that CEO Jim Lancaster installed when lean continuous improvement efforts stopped delivering great results. We received hundreds of questions, many more than we could address during the hour-long live session.
We selected questions that represented the major topics you wanted to know more about for a follow-up Q &A with Jim.
Q: Could you tell us a little more about the right-hand side of the action slide [slide 29 below]? One side has “maintain the current condition.” the other side has “improve the current condition.”
Jim Lancaster: The left-hand side is managing the standardized work of an area and the process. The right-hand side is where we manage either improvement projects in the area or projects in the area that are part of a broader, company-wide strategic project.
An improvement project A3 describes clearly what our objectives are, why we’re doing the project, and what the general plan -- the A3 storyline -- is. Then that breaks down into a series of key task monitors (KTMs) that break the work down into weekly chunks. By breaking work down, we know whether we’re on track or not, just like you know with the takt-time clock whether you’re on track or not.
Q: What’s the significance of the 30-day and the 90-day columns?
Jim: Level one KTM (L1 in above slide) is 12 months. The chunks of work that you’re trying to do are in deliverables by month. That’s where you’d plan out the whole project for 12 months. When you go to a level two (L2), it’s 12 weeks. You take the first three months of the level one KTM and you break it down into weekly chunks. You don’t do the ones farther out, just the next 12 weeks.
Then the level three (L3) is daily and it’s the next 10 workdays. You don’t try to do the daily plan beyond the next ten workdays. You don’t try to do the weekly plan beyond three months.
Q: How do you switch from managing crises to tackling small variations in processes when major issues still happen?
Jim: There are two kinds of things when you’re managing problems. The first is managing to survive today and take care of the customer today. You have to do that on big crises, little crises -- everything. When you’re clearly just trying to take care of today, that leaves you some time to do the improvement on root cause. What we try to do is do the root cause and solution in the area where we can get the biggest bang for the buck.
You’ve got to make sure we’re making the right thing for today, but in terms of the problem we’re going to chase back and make sure we never do it again, that’s going to be the problem right in front of me, so it’s easier for me to fix it.
“Our profitability has quadrupled over this period of time. The management system has been a big part of facilitating that.”
Then tomorrow I fix the next one that’s sitting right in front of me. That’s just a very different view than trying to figure out the most important, biggest, hairiest problem and taking three months or six months to fix it. Meanwhile I produce 10 more big problems and then you never get out of the gravy yard spiral, so to speak.
Q: How do you identify the right metrics for daily improvement?
Jim: The first thing is: What’s your business problem or business opportunity? When you start, you don’t have to have all the metrics. You just need to have a few to start because you’re trying to start this problem-solving process as opposed to judging the area.
In our case, our biggest opportunity was in quality improvement. We only looked at two quality metrics to start. The most important thing about the metrics was that I could get them without a whole bunch of work. It was very easy to calculate a 90-day average and post it. It’s less important to have the perfect measure of quality coming out of an area. That’s the trap everybody gets into.
Q: Great presentation. How long did it take you to get to this level of maturity? I can imagine just getting the key performance indicators, roles and responsibilities, and everyone educated took quite some time.
Jim: Well, we put in the measures, not all of the measures, but the first quality measures took one week. The roles and responsibilities were already there for the functional areas. Over time, we got more and more clear about where someone’s responsibilities stopped and someone else’s started, which helped us make decisions better. I’d say, within the first year, the basics of what we do now were in place. Then we added the other metrics over time. We continue to add them.
Q: How long have you been at it now?
Jim: 2007 is when we put this daily management system in.
Q: How long does the walk-around review take today?
Jim: The walk-around starts at six o’ clock in the morning with operators and team leaders. The team leader’s got 15 minutes with his team at the most, normally 10, and then another 10 minutes with his or her leader. Then everyone at the next level meets, which takes maybe 30 or 40 minutes. And then they meet with their managers, which is another 10 minutes.
Most people, until you get to me at the senior, devote between 10 minutes to an hour to the walk around review. It depends on how many stops you have in an area. The weekly senior-level walk through all areas takes from nine o’ clock until 11 o’ clock.
Q: Did you achieve the growth you wanted after you reset your continuous improvement program and implemented your new active management program?
Jim: Our growth and profitability improvements since we put this in place has exceeded my expectations. We did not put in the system to grow the business. We put it in to maintain what we had. I didn’t know it was going to give us all these benefits. I did it because I was frustrated that the kaizen workshop improvements weren’t sticking.
I thought all the benefits were going to come from the workshop improvements not deteriorating. That’s true, but the bigger benefits came from catching deterioration when it happens. That’s what’s made us a ton of money and the ability to make cross functional decisions on the spot, which allowed us to take tremendous costs out of the system when the recession hit. When you have a tighter management system, you can do things you couldn’t do before.
Our profitability has quadrupled over this period of time. The management system has been a big part of facilitating that. It facilitated our ability to put the in-sourcing program in place, for example. It facilitated our ability to improve quality.
Q: What kind of training did team leaders receive to sustain or improve the system?
Jim: At the beginning, very little. Now we’re in the process of doing a lot more team leader training to teacher specifically the standardized work of a team leader, which is to maintain standards first and then to improve them.
The team leader has standardized work of how to do that. It’s a specific walk they do through the area every morning to ensure everything’s in place. It’s all these things we call footprints in the snow, which are how you check to make sure that all the positive factors are in place for success today.
Once they understand how to maintain standards – usually about six months or so -- then they start working on how to improve processes. There's a whole standardized work process of how to do that.
Q: Do you teach structured root-cause problem solving to everybody in your plant?
Jim: No. We just teach it to the team leaders and the folks that are doing the improvements. Operators generally are not doing problem solving because they’re too busy assembling or welding or whatever.
Q: In Work of Management, you mentioned that one of your personal improvements was better understanding how to ask questions. What is the one piece of advice that you would give on how to ask good questions?
Jim: Make sure you know why you’re asking the question. A lot of questions get asked to show how smart you are. A lot of questions are not really questions. They’re veiled directions. The person directing the question to knows that. If you think you’re fooling anybody, you’re wrong.
Questions are about helping to lead somebody down the standardized path, generally of either problem solving or execution. The reason I’m asking questions is to find out where they are, so I can then help, not to trap or embarrass them. I’m trying to figure out where they are so that I know what they need to learn next or how I can help.
Q: Are you trying to spread lean thinking to your supply chain?
Jim: I have tried in the past and utterly failed. I have not been successful nor have I seen anybody else who has been particularly successful with it. That’s why I’m in-sourcing.
Q: It seems that this system would be hard to implement if the whole business was out of control. Would you suggest any stabilization activities before going into your system of management?
Jim: If the managers doing the walk-around do not understand the work, the value of maintaining work, and how difficult it is for an operator to maintain work, then putting the system in place is likely to increase people’s frustration. You don’t have to necessarily install a pull system but you have to implement standardized work and problem solving to start.
If you don’t know how to problem solve and your management folks don’t understand how things get made and don’t understand the world that operators live in, then you’re not going to understand how to support then when you walk around. Walking isn’t going to do anything.
Generally, you get your operation under control as managers and leaders actually learn the business. Once you have a critical mass of managers and leaders who know the business, meaning they understand how work gets done and the world their operators live in, then the management system can be really helpful.
If you put the daily management system in too soon, you get top managers who don’t know what’s happening on the floor. They just walk around and guilt trip the people who have red [abnormal] signals in their processes. They’ll pontificate about why they think the problem might be occurring.
The operators and the team leaders just roll their eyes because management isn’t really helping them. This system is set up to help, but if you’re not really helping then all you did was put a bureaucratic step that wastes everybody’s time.
“If the managers doing the walk-around do not understand the work, the value of maintaining work, and how difficult it is for an operator to maintain work, then putting the system in place is likely to increase people’s frustration.”
Q: Does your line management use computer tools to update their own metrics or do you have a dedicated Excel expert or resource.
Jim: Neither. We use grease boards and dry-erase markers. Sometimes we get fancy and we use wet-erase markers.
We don’t use computers and Excel [to track metrics] because data becomes invisible inside a box. Pick metrics in the process where it’s easy, fast, and natural to do so.
The engineering types will try to use software to make everything look pretty and calculate out to the third decimal point and have a sheet of paper color-coded up on the board. There are some areas where the team leader does that because they’re doing it themselves that way and it’s quicker for them because that’s how they do it. I prefer grease pen because it is instantaneous and accessible.
Q: The book states that if an indicator exceeded a previously defined run-rate tolerance, the area manager would turn over a laminated card from green to red. What is the tolerance that is typically used to initiate action?
Jim: If there’s a problem, any problem, there needs to be a countermeasure to ensure that everything’s okay for today and no customers are affected. When the card flips -- in most of our cases -- it’s a red grease mark instead of a green grease mark. When that happens, then there's an expectation that we go find out why we performed less well than average yesterday. There is no tolerance. Once you get a red, then you go look. The only reason you wouldn’t do that is if your quality loop board’s already full. If you’ve already got five quality problems you’re chasing, then we just ensure we’re good for today and we don’t do anything.
It’s not a tolerance issue. Once again we’re not blaming or holding someone accountable or judging someone’s performance. That’s not what we’re doing.
Q: You do talk about engineering in the book. What is the role of engineering in your management system?
Jim: Engineering is work like any other work. It has inputs and outputs and it has quality measures and time measures and cost measures. It’s really no different in terms of the work environment. It’s a little more difficult in some ways because the work is primarily inside computers, which can make it harder to observe and standardize.
We’ve worked hard to get engineering work more visible by using grease boards and WIP [work in process] out binders and stuff like that so we can see the work. Engineering is obviously critical to the work we do here, but it’s just work.
Engineering is not exempt from the walk-around. There are multiple engineering stops. There’s the product development engineering stop. If you break it down, I’ve got four stops in product development at four different projects. I’ve got a product management stop. Then I’ve got stops where we’re doing application engineering.
We’re aware if any of the individual projects that are in application engineering fall behind schedule. We’re looking at engineering change notices, which is a quality metric. We’re looking at requests for support on the floor, which is a quality metric etc.