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Substituting Money for Value Stream Management

11/13/2002
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I've been traveling again since I last wrote, this time to visit a household-name American company trying to pursue perfection in its total business after starting with an all-out Six Sigma initiative.

What I found is a pretty common pattern. Technical experts are conducting hundreds of Six Sigma projects across the company, many involving process analysis to remove wasted steps and increase inventory turns. Meanwhile the senior manager of each facility and of each administrative department has been given a set of key metrics -- each with a stretch goal for this year -- and motivated by a bonus to reach the goals.

So, what's wrong? My discussions with several facility managers quickly highlighted the problems. Each manager has multiple value streams running through his or her departmentalized facility but the metrics are at the department or facility level. Thus, natural conflicts have emerged between what's best for the department or facility and what's best for the product as its value stream flows from start to finish through many departments and facilities.

But this was not the only problem. At a report-out meeting at the end of my visit I asked the managers how they felt. The key word was "exhausted". A typical comment went, "We started with lots of excitement, but we've got so many projects under way that we can't seem to get many of them finished. And we have a problem of rapid regression once a problem is fixed and management attention shifts to the next problem."

I felt a lot of sympathy with the facility managers and hourly associates, but not much for the senior managers leading the company. They are committing three common sins the Lean Community should be getting beyond:

  • They have no policy deployment process to prioritize the improvement initiatives and to de-select down to a short list that can reasonably be accomplished and stabilized each year.
  • They have no value stream managers to look at the entire value stream for each product family, to optimize the whole rather than the parts.
  • They have relied on multiple and sometimes conflicting metrics to get their facility and department managers to do the right thing, yet have not given them any useful training in how to actually improve performance. (My saddest moment was lunch with a very able and energetic facility manager, who brought along his "stretch goals" chart as I requested. He reported that he is working sixty hours a week and has many improvement initiatives under way, yet has only been able to reach the stretch goal for one of the fifteen metrics tied to his bonus.)

In short, exhortation, money, and advice from distant experts have been substituted for the organizational changes, policy focus, and in-depth training of line managers in lean techniques that can actually produce results.

I hope you don't see your firm in this example. And, if you do, I hope you will take the appropriate actions so you can sustain your progress.

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