Lean Technology Transformation

Leadership and their Role in Value Delivery

noreply@blogger.com (Patrick Phillips) — Wed, 14 Feb 2018 15:08:00 -0700

Many process methodologies and frameworks have fundamentally proven components which can identify and promote activities necessary for optimal value, flow and quality delivery within an organization. There are an assortment of ways these methodologies define value, but all methodologies have one commonality, which they share for long-term sustainable success. Leadership and leadership support for value based change initiatives are the number one variable for success or failure of any such initiative. This paper will explore how leadership can promote successful change initiative in your organization and how with thoughtful planning and support you can avoid the most common points of failure.

Traditional command and control structured organizations are often not adequately designed for allowing leaders to adequately promote value delivery. Traditional organizational structures are also not conductive at turning managers in to effective leaders. Neither are they designed at empowering their workforce, rather they tend to focus on hierarchical decision making which promotes a command and control mentality.

Value or value creation can be viewed three ways. The customer must value it and be willing to pay for it, It must change the product or service, must be done right the first time. Many frameworks do a great job focusing on these three areas. Although frameworks are great tools at enabling value delivery they can only be utilized if the culture and environment fosters and promotes value delivery at every level in the firm, including the individual. Using Pareto’s law we can deduct that tools/frameworks only represent 20% of the ability to deliver optimal customer value while leadership empowerment and support comprises the additional 80%. In successful value focused firms 80% of the effort is expended on changing leaders' practices and behaviours, and ultimately their mind set. Senior management has an essential role in establishing conditions that enable the effort to succeed. Their involvement includes establishing governance arrangements that cross divisional boundaries, supporting a thorough, long-term vision of the organization's value-producing processes, and holding everyone accountable for meeting value driven commitments. This is accomplished through regular, direct involvement and understanding their role in empowering their employees (intellectual capital). Without this vision any value driven initiative (Lean, Six sigma, Theory of Constraints, agile) will only be seen as the flavour of the month.

Asking yourself “is your customer is willing to pay for the activity you are engaged in” can provide tremendous introspective when leading. Defining value in any other terms can undermine the potential of value delivery for the firm. Leadership often takes too much credit in the value of the organization when they often have created little direct value. The majority of the value delivered is through the product, services or placement of your firm’s competitive advantage. This means your greatest potential for value creation often resides in the employees who produce your competitive advantage. Historically to gain the ranks of manager one had to experience learn and work in multiple domains and layers of your organization and rise the ladder through the learning curve of the multiple layers. This allowed managers to gain knowledge and experience which could be used to effectively lead and make intelligent decisions. Today management still rises through the ranks but often they lack the domain knowledge they would have previously gained. Rapid Technology changes make it difficult for management to have the same depth of knowledge as those they manage. The pace of change today has created a model where leadership is in stark departure from leadership over the last century. Traditionally organizational structure is a product starting with the industrial revolution with influence from military modelling, which has proven successful between 1900-1960. A command and control model focuses on management making strategic and tactical decisions for their employees to follow without question. This method worked fairly well in highly controlled production environments which had little variability in their process.

Peter Drucker the father of Management predicted and then noticed a shift in the early 60's which indicated successful firms are putting more decision in the domain of their employees who work with the product. Product complexity and efficiency were creating an environment where productions lines where much more complicated and variable. With the emergence of service based industries it quickly became apparent that traditional management methods were out dated (although this had become equally apparent in manufacturing earlier). Successful organizations today understand the majority of tacit knowledge with tremendous potential resides in the knowledge worker. This is the same worker who under earlier models lacked decision making authority and operated as order takers.

What is the primary role of a leader today then? This question is asked far too infrequently, and when it is asked, the answers are predictable and often wrong. But it is a vital question, as without leadership, empowered employees will never get off the ground. Common replies include setting the vision, establishing priorities, and providing motivation. These are important responsibilities they are out dated. The essential purpose of a leader is to do one thing: create and empower change. Without a good leader, nothing changes. If a lean program, or any other program for that matter, is failing, it is probably not the fault of the tools. It is failing because of lousy leadership. As you embark on your journey, learn all you can about the concepts, practices, principles, and tools of your choosing. But remember, above all, the goal of these tools is value – and value hinges on leadership who promote and empower that change.

The knowledge workers need to be in control of achieving and promoting change. Therefore, the leader must convey to the worker that they are the ones who own the processes. Leaders need to empower people to have everything in place in order to perform. Only when they know and are empowered what to do will they feel accountable and take ownership of the processes. In organizations with traditional leadership behavior, there are frequently policy deployment directions from senior management. The mindset of these leaders is not to involve the people at all. Therefore, people can’t relate to the KPIs (Key Performance Indicator) that cascade down because they can’t understand their contribution or the relevance of the KPIs. People in these companies can’t engage themselves in supporting their senior management in delivering results. Consequently any initiative which does not empower or utilize the input of the employee are more likely to fail.

Leaders must focus on commitment to continuously invest in people and promote a culture of continuous improvement. There is no destination for value delivery models, there's only the journey. As a leader you should never consider your “Lean” or “Agile” program as complete. Once you make this mistake you start down the path of contentment and will lose focus on empowering continuous change. If leader provides a full and continuous investment in their employees then they will in turn see dedication. All too often when talking to senior management about learning and multi-skilling of employees, they tell us they worry about efficiency. When people are learning, they are slower and less efficient is often communicated. Therefore, the view is that it is more efficient to have the specialist work on the specialist things (there are times and places for specialists but that’s for another paper). This might make sense from a traditionalist, but from a product-development-as-knowledge-creation perspective, this kind of thinking is plain wrong and even dangerous. Learning is the major value added activity in product development and knowledge transfer. In the long run, reducing learning will only result in loss in market share and a less valuable staff. Often management use the excuse that they have to assign resources to satisfy the customer first, which leaves them little or no time to make real change. Their bosses find it hard to argue the point (or use it as a convenient excuse themselves). Value based culture requires you to make the time to make the change—long-term planning and results versus short-term results with little planning.

All leaders have the ability to adapt to the new value driven leadership mindset. However, not everyone will be capable of doing it without intensive coaching and support from their own leader or experienced external coaches. Even though initially some of these leaders will not feel comfortable in being a leader in this new system, not many of them leave or are forced to leave because, over time, most will understand the value and adapt to the new leadership system.

Not every leader nor every company culture is ready for this change in leadership mindset. Despite this, many companies have implemented value based tools and techniques for years with tremendous success (Toyota, Boeing, GE) . For example using a lean framework, ‘Center for Ledelse’ interviewed 400+ companies concluding that only 7% had realized more than 80% of their expectation in their Lean program. This only confirms that these companies need to take action now in adapting Lean leadership behaviour and mindset in to their company culture. Every leader deserves a chance, but remember you will have to fight a lot of skepticism down that road. You will likely need to convince the team members by showing them what is in it for them personally. People will change when they realize that their leaders really want to empower them. Leaders need to be consistent in what they ask for. They should not reduce their requirements. They should not change their communication. Consistency it required and we must accept the fact that it takes time sometimes many years for this change to fully reflect in the culture.

Dedication is required of each team member to strive for self-improvement. Commitment is needed for each team member to ensure the values and principles will be followed and the team will hold itself accountable. Courage, because the emotions that empowerment invites, will be unlike anything the employee has ever professionally experienced. Avoid non-dedicated team members or “partial allocation.” A team member who is in multiple teams does not have the same commitment and shared responsibility as the other members. Part-time people equate to part-time commitment. Part-time commitment leads to team failure. To the maximum amount possible, all members are 100 percent allocated—fully dedicated to their team. The amount of management waste that disappears is amazing.

What you do from this point forward is exciting. The possibilities for your firm are endless. There are many sceptics who think value based programs cannot work for them. They are right, if they keep that mind-set then it can’t. There is no doubt the concepts presented in this paper can work for you. From the world’s largest auto maker to the smallest organization you can make this work. It can work for you, your vendors and even your customers. Take the time to explore your leadership potential and realize that anything is possible.

Why Do We Underutilize Human Potential?

noreply@blogger.com (Patrick Phillips) — Tue, 9 Jan 2018 09:43:00 -0700

Large and small corporations, both in high-tech and traditional industries, now owe most of their value to investments in knowledge. These investments, creating value from the intangible assets of intellectual capital, have a better return on investment (ROI) than physical assets. In our knowledge-based economy, effectively developing and applying intellectual capital is the key to creating value. Intellectual capital is defined by businessdictionary.com as the "Collective knowledge (whether or not documented) of the individuals in an organization or society. This knowledge can be used to produce wealth, multiply output of physical assets, gain competitive advantage, and/or to enhance value of other types of capital. Intellectual capital is now beginning to be classified as a true capital cost because (1) investment in (and replacement of) people tantamount to investment in machines and plants, and (2) expenses incurred in education and training (to maintain the shelf life of intellectual assets) are equivalent to depreciation costs of physical assets. Intellectual capital includes customer capital, human capital, intellectual property, and structural capital."

One of the fundamental tenets of lean is the reduction of underutilized human potential. What exactly does this mean? Systems2win defines the underutilization of human potential elegantly:

Restricting employee's authority and responsibility to make routine decisions. Having highly paid staff do routine tasks that don't require their unique expertise. Not providing the business tools needed to perform and continuously improve each employee's assigned work. Not trusting your people to stop production to stop and fix a problem (jidoka). Not trusting your people to be responsible for the cleanliness, maintenance, and organization of their own work area. Not trusting people with a flat organization structure of largely self-directed teams. Not expecting (and measuring) every person to contribute to continuous improvement.

The intriguing concept in this statement is the inability to trust. This lack of trust speaks to the ecosystem of current organizational structures. Peter F. Drucker stated that the organization hierarchy in most organizations today developed as a result of World War II and the attempt to create efficiencies by structuring the firm like the military. While this organizational structure may have made sense 50 years ago, the command and control model is one which does not support the facilitation of human capital to better your organization. Through my research I would argue the military type structures in place today are ineffective in developing and applying intellectual capital and need to change.

Leveraging Knowledge

In my experience, about 80% of a company's knowledge is undocumented or unshared and thus lives in the tacit knowledge world while the remaining 20% of explicit knowledge lives in documents or procedures which in that are often ignored. Think about that ratio in terms of your organization. If you are only utilizing 20% of the knowledge of your employees, what is the opportunity cost to your firm for what you miss out of your intellectual capital? If 80% of your organization's capital resides in the knowledge of your workers, managers are hobbled in their ability to make decisions regarding how those assets are utilized.

CEO's are frequently asked "What is the most important asset to your organization?" The standard response is, "Our people." While this is often the general response, it is rarely true. When asked to further define why people are an organization’s most important asset, most managers will resort to primitive answers such as, "They make our products," or "Without them we can't do anything." While these responses are certainly correct, they are a subtle gauge of a lack of trust because they only refer to the physical output of the employee. After all what's one the first items to be cut when cash flow goes red?

This line of thinking is not only broken, it's dangerous for the future of your organization. Regardless of your product or service, your greatest asset is your people; not in what they do but in what they know. Their intellectual capital (tacit knowledge) is something that can move you from being a good company to being a great company. With knowledge empowering people, your organization can develop products your competition simply can't given the same resources.

The failure to leverage employees’ knowledge creates the opposite result. We have seen companies falter when people retire from firms that have failed to create an environment of successful knowledge transfer.

Creating Transformation

This problem is not easy to tackle. How do you transform an organization with a culture that doesn't adequately value intellectual capital into one which lives off it? What components must be in place in order to facilitate this change? It starts with management. Once management truly supports an investment in intellectual capital, significant advances can be made by following a few recommendations. As with all change, these take time and effort but they can turn your organization into a world-class institution:

A culture of innovation begins at the top but must permeate and trickle through all levels and all functions within any organization. The work ethic, transparency, simplicity, humility, integrity, and accountability of most farmers offer insights and leadership lessons for all of us, particularly leaders interested in fostering a culture committed to intellectual capital agrarianism. Norms must be put into place and enforced that foster cooperation, teamwork, candor, a sense of a common purpose, and a commitment to a set of institutional core values that transcends individual agendas and priorities. These shared values must be truly embraced by everyone, not just appear on a page on the company’s website. People are more likely to innovate and truly want to improve their workplace when they identify with and want to be governed by a set of shared institutional and consistent values and when they are confident that the fruit of their innovation labors are aligned with overall companywide strategies and goals.

As executives, dedicate yourselves to supporting substantial efforts to prevent lost knowledge but culturally and physically. Create a culture of lean which empowers knowledge workers. Empowerment is a book in itself but to create this environment you must create what Forrester calls HERO (highly empowered and resourceful operatives). Creating a process of improvement through value streaming and Kaizen where management recruits intellectual capital accepts the recommendations for change. Emphasize teamwork over teams. Teams refer to small groups of people working together toward a common purpose. Teamwork refers to an environment in the larger organization that creates and sustains relationships of trust, support, respect, independence and collaboration. Creating highly empowered teams that work without titles can create the shift of culture to one that prizes intellectual capital. Focus on knowledge capture and allowing knowledge transfer. Several methods can entice team members to transfer knowledge, including mentoring, paired teams, work shadowing and simulations.

Utilizing human potential is a complex topic. Although many organizations view capturing the remaining 80% of tacit knowledge as a lost cause, it is certainly worth the effort. In reality, most firms do little to try to capture and use their human potential. However, doing so can provide exponential returns and will enable your organization to achieve greater success with minimal additional resources. I encourage delving into some of the lean communities for more advice on how to utilize human potential within your organization.

IT Must Adapt or Die: This Story Brought to You by the Third Party Providers Trying to Make You Irrelevant.

noreply@blogger.com (Patrick Phillips) — Tue, 10 Oct 2017 07:40:00 -0600

Five years ago, less than 25% of business leaders rated their organization’s IT function effective at delivering the capabilities they needed. Today the number hasn’t changed. IT functions have strived tirelessly to understand demand, set priorities, deliver effectively, and capture value, yet the results still disappoint. Business and IT leaders alike feel they should be getting more—more efficiency, more innovation, more value—from technology. Unasked QuestionsAmong all the talk of engagement, alignment, and “being part of the business,” one assumption is never challenged—that for information technology to grow in strategic importance, so must the IT function. But what if this is not the case? What if a dedicated, standalone IT function is no longer the best option and the function’s resources and responsibilities were better located elsewhere?

Lets face it traditional IT is under assault. Frankly if you can't compete with these threats then you deserve to lose the battle. Look at the change in who can provide value to your organization without any involvement from IT. Today third party providers can create shadow IT footprints all over your organization. There's little to stop them when they are providing more value to your customer then you are. There are a tremendous number of consultants out there who will attempt to prepare you to compete against these firms. In order for anyone to be successful though I have posted the five greatest shifts your IT organization must make in order to stay competitive and continue to provide value to your customer.

Evolution 1: Data/Information Over Process – The rise of technology delivered as a service, or the cloud, will significantly reduce sources of competitive advantage from information technology. In theory, a start-up could use the cloud to obtain the same functionality, scale, and quality as an industry leader. Thus reducing barriers to entry which will certainly even the playing field. Differentiation will lie in how IT manages change, integrates its service portfolio, and critically, exploits the information the services generate.The nature of demand for information technology also is changing. Most employees are now knowledge workers. Social media is becoming vital for customer and internal communication, and data volumes continue to rise. As a result, in the business areas that drive growth—innovation, marketing, sales, customer service—up to According to Marty Pine (Marty Pine is a recognized thought leader and an internationally known Global Business Services Professional who has worked as a senior executive in customer, provider and advisor companies.) 80% of IT enablement opportunities relate to business intelligence, collaboration, or the customer interface. At the heart of each of these opportunities is the need to capture, integrate, and interpret information, both structured and unstructured.

Evolution 2: Eliminate the IT Silo and Embed in the Business – Traditional corporate structure is on its last leg. All corporate functions have the same problems: their capabilities overlap; they do not control the outcomes they enable; and after many cuts, they are struggling to find the next big efficiency. And for organizations growing in emerging markets, no corporate function has the scale or expertise to provide sufficient local support.The IT function shares these problems. It has skills in strategy, program management, business process design, and sourcing. All are valuable, but none are needed solely for delivering technology, and so they can all exist elsewhere. I have discussed this before when defining organizations as vertically managed. There is no visibility across the value stream because firms are not set up to execute that way. Creating an IT organization which can

Second, no amount of alignment and partnership changes the fact that the IT function enables business outcomes that someone else controls. Much value has disappeared down the hole that this situation creates. Finally, cost pressures mean many CIOs face the unwelcome choice of cutting delivery resources needed to “build things right,” or management resources that ensure IT “builds the right things.”

The need for efficiency and joint accountability for execution and outcome will change the IT function’s delivery model and organizational location. Technology will be consumed as part of business services as the IT function merges into a business shared services group alongside other corporate functions.

Evolution 3: Rogue IT – Externalization of applications development, infrastructure operations, and back-office processes continues, gradually eroding the “factory” side of the IT function. The pace will accelerate as the cloud enables the externalization of up to 80% of application lifetime spend. As this occurs, internal roles will shift from being technology providers to technology brokers.

Evolution 4: Greater Business Partner Responsibility – Technologies for collaboration, business intelligence, and customer interface all require experimentation and iteration, use non-linear, user-driven workflows, and offer value from diversity across the organization. None of this is easy for a central function to fulfill.A generation of business leaders and end users is emerging with greater technology knowledge and confidence. They see advanced, user-friendly technology as an everyday occurrence, and can recite stories of companies gaining industry leadership through technology. At the same time that business leaders’ expectations, and their ability to articulate those expectations, are quickly rising, the cloud gives them access to unprecedented technology scale and expertise. The fact that cloud services cannot be extensively customized levels the playing field; business units cannot customize cloud applications but neither can the IT function.Together, these trends point to a greater role for business partners in areas where the value of differentiation outweighs the need integration. This is not a return to local control of IT resources, rather it is a shift in responsibility for technology decision making.

Evolution 5: Diminished Standalone IT Role – As IT roles migrate to business services, evolve into business roles, or are externalized, the scope of the IT function will diminish and its headcount fall by 75% or more. Strategy, architecture, risk, program management, user support, and relationship management will exist at the business services level, not within the IT function. The CIO position will expand to lead this broader group or shrink to manage technology procurement and integration. Roles remaining in the IT function will organize around build and run, and adoptan agile operating model to allow rapid value delivery and resource mobility.Organizations that do not make these shifts will be left behind as they struggle to effectively exploit technology and manage an inefficient IT function and an underperforming corporate center. For IT leaders too,the shifts present risk and opportunity. Those who do not adapt face a much diminished role in a group with little strategic impact. But the opportunityis also significant. Leading a business shared services organization offersnew levels of resource and accountability for business outcomes. Another option is a leadership role in a newly empowered business unit that thriveson exploiting technology for competitive advantage.

These five shifts should move your group to one which can compete with third party providers. Research consistently shows that in most companies strategic intent is not clearly articulated, and this leads to a disconnect between strategic goals and daily activities. The better an organization communicates strategy in clear, actionable, and measurable terms, the more successfully the Lean transformation can focus on driving change where it matters most. There are many perspectives and approaches to strategy, but it all comes down to a few simple questions. How does an organization define and differentiate itself in such a way that customers prefer it over their competitors? What are the activities the organization must engage in to achieve this status? And how do they sustain competitive advantage over time, as their competitors constantly try to capture market share? More important, in our opinion, than the details of an organization’s strategy at any point in time is how well everyone in the organization understands the strategic intent, and how this understanding guides their daily thoughts, behaviors, and decisions.

What Makes Your Product Valuable? Journey on the Value Stream - Part 3 on Organizational Improvement

noreply@blogger.com (Patrick Phillips) — Sat, 2 Jul 2016 22:09:00 -0600

In our previous discussions I introduced concepts around how to start organizational change from a
combined bottom up/top down approach. We have discussed how to introduce an initiative which focuses on improving the organization in terms of value delivery. We have also discussed how to mind map the organization to find troubles, constraints and a true picture of your company. Once your problems have been identified it can be easy to try to simply "fix" the problem. What I mean is that human tendency is to correct what we think is the biggest perceived symptom. Approaches of this nature commonly lacks greater vision and likely only moves the problems or defers to another bottleneck. When this shortsighted plan just defers to the next constraint the whole effort is often construed as a failure. What must be considered when facing organizational change is the value stream as a whole. Understand as many constraints or non-value added activities as possible when mapping the stream. In all my consulting experience I have never seen an organization who begins a value stream map exceeding 6% of value added activity. Setting expectations with leaders from the start to have patience is a key to organizational improvement.

Example:

I was working with a development team who believed they needed to hire more developers because it was taking six months to get code released (forget agile for the moment)to production. This was their problem statement (and their perceived solution). After creating a value stream map of the development cycle we learned that the cycle time was almost 900 working hours. Four hours of that time was spent developing. Roughly 80% of that time was wait time. Had the team hired more developers they could have attempted to double their productivity and take two hours out of their total cycle time. Wow what an expensive solution. Or they could have eliminated several management meetings which were simply rubber stamp approvals to move forward. Reducing the meetings took 300 hours off of the total cycle time, and it cost nothing to implement. To get that efficiency gain by hiring developers is simply impossible yet this is most commonly the first solution to reduce development value stream times.

The concept of value stream mapping has been written very extensively and while there are many good posts most simply introduce the concept but fail at plugging the concept in to something actionable. Or they prescribe perfect ways to change your value stream without providing a lesson on why focusing on the value stream is relevant. I will refer to many smarter practitioners through this blog but it's important to define what value stream mapping can accomplish in terms of starting organizational change. The LSS Academy has put it best at defining a value stream as "A value stream can be defined as all the steps – both value added and non value added – required to take a product or service from its raw materials state into the waiting arms of a happy customer." Again the concept of value in this scenario is simply what your customer is willing to pay for. We know that there are Value Added (VA) activities which the customer finds worth to pay for. Non-Value Added (NVA) activities are usually where great debate begins. This work is often very overwhelming and it's not a bad idea to look for an outside consultant to help you. This is really the only time where I encourage going outside to make this success.

Again it's important to remember why we are doing all these activities. Shigeo Shingo said, “The four goals of improvement must be to make things easier, better, faster, and cheaper.” Note the sequence of this list; Lean focuses on adding value and eliminating waste through simplification, quality improvement, and lead time reduction; cost reduction is a natural outcome. According to Gartner, “One of the biggest mistakes companies make with Lean is focusing too heavily on driving cost out of the business. If you approach Lean with that attitude, you’re bound to fail. Building a huge data center may give you great economies of scale, for example, but it may also reduce agility and flexibility.”(Bell, Steven C. (2012-01-04). Lean IT: Enabling and Sustaining Your Lean Transformation)

Consider your own organization, you are likely structured in the form of departments which scale and report vertically. Who is responsible for the product from inception to cash? A value stream is the horizontal flow of your product from that inception to cash. This will feel odd to your organization because they rarely care about their products in that manner.

The best analogy is to compare the value stream to a story. A product begins its journey in marketing and end in accounts payable. The key to creating an excellent current state VSM is to document what you actually see with your own eyes. We are not interested in how the process is supposed to work, or was designed to work. Instead, we are interested in how the process is performing today. Will the process change a bit tomorrow? Sure. But that’s OK. In fact it's encouraged. There a many different ways to create a value stream map and my personal opinion is that you use one that works for you. As long as the result of the exercise is to identify your waste or NVA activities in your stream. Below is a good example I found from ASQ on a simple value stream map.

Now lets get started. The teams created for the prior steps in this journey should also be used to value stream map. They will understand the mapping and problems in the organization best and it's encouraged you stick with those team members. They are likely the only people who have ever looked at the organization horizontally versus vertically. For example I once worked with a large insurance organization who were structured in to operating companies. No big surprise there but each OP Co. was designed to support certain business segments (home insurance, life insurance, investments). Within each segment we also saw turf wars where they hesitated in helping other departments. Activities as easy as sharing customer information or transferring phone calls from the customer were almost impossible to accomplish. Where's the value in this line of thinking? Well it's easy to keep that mind set when you only look within you own department. Encourage your people to think across the value stream and you will see very different outcomes.

Steps

1. Draw the current state value stream map with all of the steps, delays, and information flows required to deliver the target service. IF you're interested in some templates please contact me.

2. Assess the current state value stream map in terms of flow and waste. Collect all missing data (e.g., value added, cycle time, etc.).
3. Calculate the total lead time and value added time.4. Identify and list all areas of waste (e.g., inventory, transportation, etc.).
5. Develop a list of opportunities for improvement based on these observations.

Below is a great example of mind mapping a development process (From the blog Wide Awake Developers, http://www.michaelnygard.com/). This can show a good example of how Agile and Lean can fit together in the IT world. Think of an agile activity as something which could exists more at an execution level in each activity while the Lean Value Stream focuses on the end to end process.

I’m going to use the prescribed method from the LSS Academy below. Now this has a manufacturing focus but can easily be replaced with services or code.

Walk the process front to back. Quickly walk the process with your team in order to understand the general flow. It’s important to also define the start and stop point of the process. Don’t attempt to take on too much. Remember, we eat an elephant one bite at a time.

Draw in the customer box / details. In the top right hand side of the paper we draw the little saw topped box representing our customer.

We also note their monthly and/or daily demand along with the takt time as calculated in step

Go to the end! Next, we start at the END of the process and begin drawing the map back to front. And don’t forget about that eraser. You will need it. Nominiate a scribe and have them draw the map for the team.

Another trick is to ask each person on the team to map it out so you can compare and consolidate when you get back to the room. Yet another trick is to have the team divide and conquer as you send some off to map the beginning section, some to the middle, and some to the end. There are many ways to do this. Experiment and do what works best for your situation.

Focus on the flow first. Focus on the flow side of things first (bottom portion of the map). This includes the process boxes and data boxes. Regarding the data boxes, if you don’t have all the data perfectly collected on the day of the mapping exercise just do the best you can. You can always assign homework to go back and validate the figures later. In fact, even if you think you have solid data, the six sigma side of me urges you to validate your measurement systems to make sure we can trust the data. If you want to get really tricky state both a measure of central tendency and dispersion. You won’t see this advice in most lean VSM books… I guarantee it!

After studying the KB&R manufacturing process for an afternoon we learned that each process step is staffed with 1 operator. We also collected cycle time information at each step. Additional “homework” will be to collect information such as defect rates and changeover times.

Add the Inventory/Wait Times. Once you have all the process and data boxes in, it’s time to add in inventory and/or waiting times. For inventory, we simply count the number of components in between the processes and note them under the triangle.

We also want to convert these components into days’ supply. To do this, we divide the number of components by the average daily demand (which we used to calculate takt time).

So, if your average daily demand is 10 components and you count 20 components of inventory in between process step A and process step B you have 2 days’ supply (20/10) in between the two processes. We will note this number on our timeline (to be added in a future step).

Lastly, don’t attempt to map every part number! Choose one or two key components to start with. You can always add more to the map later. In our example, we chose to simply count two components of bread as one subassembly since they move together down the production line.

Also, we are not accounting for the peanut butter and jelly “raw material” at this point since KB&R’s expert supply chain team negotiated a killer consignment stock deal with Sam’s Club so this inventory is quite low on the line. During the study, we learned that, as one example, there were 486 sub-assemblies (972 components of bread) in between the jelly application and packaging stations. This equates to 0.69 days’ supply (486 units / 700 daily demand).

Lastly, during the walk through of the process we noticed that each process step seemed to be working in isolation. In other words, the lady working at the peanut butter application seemed to produce as many units as she could and then pushed them along to the jelly application process.

This “push” process is found in just about every mass production process known to mankind. When we see this pushing action we note it on a VSM with a dashed line through the yellow inventory symbol.

Draw in the information flow. This step is what really separates a VSM from traditional process maps in my opinion. You see, in addition to learning about how material flows we also want to understand how information flows.

For example, we want to know it is moves about electronically? If so, we use a lightning bolt looking arrowed line. Is it communicated manually? If so, we use a straight arrowed line.

During this step we also draw in our production control box. For many, this box will include the letters “MRP” in it. In most mass production systems we typically see several manual information (straight) lines coming out of the MRP box aimed straight at each process step box.

In our example, we learned that production schedules each process step in isolation. In other words, each work station gets its unique production schedule. We draw this using straight “manual” information lines.

We also add in the information flow from our customers as well as to our suppliers. In our example, we learned that PB&J’s customer sends 30 days electronic forecasts as well as electronic daily orders. Conversely, PB&J sends its bread supplier an electronic weekly forecast.

Add in the timeline. We can now add the timeline to the bottom of the value stream map. This saw tooth looking line helps us separate the value added cycle time (taken from data boxes) from the non-value added time (days’ or hours’ supply info).

The last step in the process is to sum up all the “value-add” cycle times and note them at the end of the timeline. Likewise, we also sum up the “inventory” times and note that on the timeline.

Points to keep in mind.

Prepare for the High Cost of Participation. While value steam mapping can be an effective process improvement tool, the cost to use it can be high. Like racing a top fuel dragster, value steam mapping requires the presence of highly skilled support team members who practice frequently. Because of the need for considerable detail, team members will spend hours, even days, to develop a comprehensive value steam map.

Unlike drag racing, where direct costs can be measured, value stream mapping involves the risk of opportunity costs that are difficult to quantify. Simpler, more productive tools that are easier to learn might be available to make describing the current process faster and more effective. Many organizations forget to consider these opportunity costs for using value stream mapping.

This take times. Remember if you looking for a quick fix you might find it here but will quickly be disappointed when the entire effort fails. This is not only a change to your process but more importantly it’s a change to your culture. People take time to change. If your leaders aren’t supporting this from the top down and in the long run then you’re just going to spin your wheels.

Other Problems will appear. If you’re familiar with the Theory of Constraints then you know that anytime one bottleneck is identified and eliminated another one will appear. That bottleneck as always been there but has not been your primary constraint. Don’t be discouraged if you find a mind field of bottlenecks. It’s proof that what you’re doing is working.

Enterprise Wide Problem Mapping: Step 2 in Enterprise Transformation

noreply@blogger.com (Patrick Phillips) — Thu, 9 Jun 2016 15:07:00 -0600

This post is focused on identifying and prioritizing constraints within an organization as part of the transformation process. It's important as leaders and knowledge workers that you take the problem solving (or as some call it Root Cause) step very seriously and more importantly patiently. After all problem solving is usually the original intent for the majority of transformation efforts. Womack describes four essential Lean management states of mind that must be cultivated for an authentic transformation with problem solving being a large component:
1. The Lean manager eagerly embraces the role of problem solver.
2. The Lean manager realizes that no manager at a higher level can or should solve a problem at a lower level—problems can only be solved where they live, by those living with them.
3. The Lean manager believes that all problem solving is about experimentation by means of Plan-Do-Check-Act.
4. The Lean manager knows that no problem is ever solved forever.
James Womack, “The mind of the Lean manager,” Lean Enterprise Institute Electronic Newsletter, July 30, 2009.

My first blog post was a summary of the steps which need to be taken in order to start an enterprise transformation by briefly discussing the management components which much be in place for any transformation to begin. This second blog post was written to introduce the idea of thinking about organizations horizontally (value stream). The first steps in an enterprise transformation are slow but are very important. What is often overlooked is most organizations simply don't grasp how much help the average manager needs in learning to see the value stream or how eagerly managers embrace the mind map once they see them. Now if only every manager and every mapping team can achieve and sustain the effort to understand current state.

Without a mind map (or other identifier) of the current state picture defined, your problem identification and consequent solutions will be hard to socialize. Furthermore this activity is likely the first time you or your leaders will have seen your organization in this light. It will be shocking with how large and thorough this map will be, especially considering this isn't an "organizational map".

All this work has not yet provided anything which traditional change programs would be considered a "win". That's just the point, this is not a program. This is a cultural transformation which will take time between when this starts to when you will start to measure improvement. It's important at this point to be patient as this phase in the process sees the problems and must have restraint to not try to solve them as they are identified. Be patient, you will get there.

The mind map is complete, now what? Edward Deming said it right when he said most problems are because of process not people. As a result it's important not to assess blame in these exercises. There is little value in blaming others for the problems as it creates an atmosphere which does not facilitate positive results. It's a good idea at this point to continue involving members of the team who created the mind map(s). No manager at a higher level can or should solve a problem at a lower level. (And one of the worst abuses of lean tools lies in trying to do just this.) Instead, the higher-level manager can assign responsibility to a manager at a lower level to tackle the problem through a continuing dialogue, both vertically with the higher-level manager and horizontally with everyone actually touching the process causing the problem. Womack's lean law of organizational life is that problems can only be solved where they live, in conversation with the people who live with them and whose current actions are contributing to the problem. But this requires support, encouragement, and, yes, relentless pressure from the higher-level manager.

This point is where different methodologies and frameworks will diverge as well. There is no right or wrong way to move forward from here. The many variables of your situation as well as what type of organization you are will dictate the most sensible path. You can use many different methods to determine the size of a problem as well. The suggestion I will give is simply one path of many that can be successful. Once a problem map has been identified you can easily insert it to the method which you find best suits your company (Theory of Constraints, BPR, TPM, Lean, Six Sigma, Agile, ETC).

Create a mind map of your issues. What I mean by that is take the original mind map and create a correlating issues map. Don't stop with the first few problems you encounter. Try to make it as thorough as the mind map. This is the map where you will look at activities to improve and/or ignore. We know it's not possible to fix everything now, but with this list you will be able to quickly take issues off the map when they are resolved as well as (and this important to do) add items when they appear. Below is an example of a problem map I facilitated with a Quality Assurance (QA) group in a software development department. You will note there are no solutions or assignment of blame. Simply a map of what the problems are.

Again this map will likely be a first for your company. It's not often a company has a map of their largest issues/complaints. With this map you are now prepared to take a step which can start to deliver measurable results. It's best to have your team who created this map sit on this for a couple days. Have them think over what they have come up with. Then get the group back together to discuss the problems and narrow down where to start.
Take the complete map and start talking about what are the biggest issues. It's likely that the room will already have a consensus on the largest issues. When there is a consensus on what the largest problem is. Use what is known as the "5 Whys". The 5 whys is a proven method to determine how to get to the root cause of a problem. Rather then explain it myself I will borrow from a great book titled "Lean IT" by Steve Bell.

"The Five Whys is the simple method of asking, “Why?” repeatedly until the root cause of a problem is uncovered. Normally the root cause is reached by the time we ask the fifth why. When the team believes it has identified a root cause, it works backward using “Therefore…” to test its logic and ensure it hasn’t missed a step in the sequence. For example, if the team investigating IT service request delays would have used the Five Whys, it might have gone as follows: Had the team performed root cause analysis, it may have discovered that there was a need for improving underlying business processes and developing standard work before considering technology-based solutions (a common theme throughout this book)."

Bell, Steven C. (2012-01-04). Lean IT: Enabling and Sustaining Your Lean Transformation (Kindle Locations 4004-4010). Taylor & Francis.

Once you have found what you consider to be the largest problem in the mind map and the problem if fully agreed we will now take that issue and make it our first actionable item which we will focus on for our enterprise transformation. That will be the topic of my next blog post - Value Stream Mapping.

Please let me know if you have any questions. This topic is very broad and I am the first to admit there are many ways to achieve what I've explained .

Starting Enterprise Change Step 1- Current State Mind Mapping

noreply@blogger.com (Patrick Phillips) — Thu, 2 Jun 2016 00:09:00 -0600

is plainly an agreed on visual representation for how the organization looks today. It does not define solutions or place blame. It simply is the baseline you will use to define and measure your organization transformation.

The most common contention which commonly arises in enterprise transformation is what I call climbing the mountain. Intellectual Capital or IC (your employees) in most organizations have no problems identifying and defining all the inefficiencies within their organization. Complications ensue though when they are asked how to resolve those issues, or how they came to be. Additionally, much time is wasted arguing the merits of the issues when you're simply trying to identify your current state. It's even more difficult when the IC are part of the problems which they are trying to identify and can be offended with the assessment. No one likes to feel they are a liability to the organization and most IC rarely objectively realize they are. Add on the bureaucracy of pet projects or emotional commitments and it's really no surprise the failure rate of these initiatives are so high (some estimates as high as 90% according to Bill Waddell.

Second, when issues are identified, how do you objectively decide what to work on without adding the complexity of everyone's flavor of the day? The flavor of the day consists of what's current in your mind as your biggest issue (which is often the most recent) facing the organization. This is rarely the largest non-value added component which needs the highest priority but is simply the one that pops in to your mind as the most recent (and likely the most important if we are being subjective). A simple example of this is defined in The Goal written by Dr. Eliyahu M. Goldratt, a business consultant whose Theory of Constraints (TOC) explains that anything not a bottleneck should not get initial focus as it will not improve your process capacity. This story though shows how easily the wrong item can be worked on and why it's so hard to identify the bottleneck or larget problem.

While much of what I'm introducing was created in Lean cultures, I don't propose calling yourself Lean when you successfully implement these steps (you still have more learning to actually "Be Lean"). Introducing Lean management and information systems requires discipline, time and reflection. Lean principles are even more difficult to embrace, yet they eventually come to influence behavior throughout the enterprise. Values and principles must have time to become internalized within the unique culture of each organization and this is simply a first step. Nonetheless, it is difficult to begin with values and principles alone, because they are intangible. This is where the principles of mind mapping will help (By far the best literature on Lean in IT is Lean IT by Steve Bell and Mike Orzen. This is the most comprehensive book you will find if you're trying to start your lean journey in IT).

Great, you want to begin your lean journey but where do you start? I've told you all the problems you will face but haven't yet told you how to avoid them. Where does one begin and who should be involved? This blog post can not tackle that large of a concept but I suggest several books to read to get acquainted with some best practices (A great place to start is Making Strategy Work by Lawrence G. Hrebiniak). At a very high level though your organization must tackle several components in order to launch.

1. First any change initiatives need to have top down support. This doesn't necessarily mean that upper management needs to manage the change but at a minimum they must fully support the change initiatives and be willing to change themselves. Additionally with the top down support you must fully tap your intellectual capital but I'll get to that later.

2. Create a blank slate. Do not come in to the initiative with a pre-conceived notion of what or how to change. Spend time if you need to getting people on board who can be objective and provide honest input. While being objective can be difficult, you will already have a room full of pre-conceived solutions if you do not take this step seriously. After all if you already have the solution to the problem why haven't you succeeded thus far in eliminating it? This is difficult additionally because most change initiatives within an organization are initially created because they want to solve a specific problem. In the end the original problem will be solved but TOC and mind mapping will eventually identify your root cause.

If you're new to this concept or your organization is very basic on conceptualization, then start small. Perhaps, do it inside your span of control or as a personal improvement plan for your commission. It's very important that you involve all the intellectual knowledge available on the matter. If you fear this can't be done initially then narrow your first step to where you can have full access to that knowledge base. The largest disservice organizations can make is to not involve the knowledge workers and only involve management. Management certainly can participate but in today's world most intellectual knowledge is the tacit knowledge of your IC (regardless of industry I find this to be true. Peter Drucker initially saw this as early as the 1950's and it has only continued to be proven true).

Getting the caveats out of the way allows us to finally talk about what is the first step. This stride can often be the most difficult because there are so many potential ways to begin (and fail). There are countless articles and books which describe how to create successful organization change and most are exceptionally good from certain frames. I find them a bit too prescriptive and often complicate something which should attempt to be simplified. Being too despotic out of the gate narrows the possibility of success when your case should need to deviate from their framework. My personal experience has proven that beginning with a mind map is a solid common method to define what previously only exists in your mind. The information you will discover in a mind map has likely never been mapped for your organization and your ability to learn from the experience is truly priceless.

A mind map as defined by Wikipedia is "A diagram used to visually outline information. A mind map is often created around a single word or text, placed in the center, to which associated ideas, words and concepts are added. Major categories radiate from a central node, and lesser categories are sub-branches of larger branches. Categories can represent words, ideas, tasks, or other items related to a central key word or idea." Admittedly the main goal of a mind map is for the facilitation of knowledge transfer from everyone in the session around one concept. Granted it's not that easy, but the concept can range from the organization all the way down to a specific job role. This simplified approach is successful primarily because simplifies what is very difficult for people to state in a traditional strategic approach (Brain Storming, etc).

Mind mapping takes what are often considered complex relationship between organizational components and allows them to be visually simplified. This method does a great job in minimizing what Chip Health and Dan Heath defined in their book Made to Stick: Why Some Ideas Survive and Others Die as the curse of knowledge. The curse of knowledge occurs when we assume others around us have the some comprehension of concepts which we often consider second nature or back of our hand. Alas we have a hard time often explaining our jobs, product specs or protocols to those who are not inside the organization day in and out. For example, if you ever have the opportunity to listen to air traffic controllers working, you will understand what I'm talking about. Their instructions to pilots are firm and concise but if you're not educated in to their protocol you would not have any idea what they are talking about.

Mind maps do a great job at minimizing the curse of knowledge by allowing a simplistic framework to state what is often "obvious" . Mapping can be done with software (I use Inspiration 9) or simply a white board or powerpoint. The map starts with a center point concept or locus.

This concept is the highest level of which your initiative focuses. There can not be a higher level defined in the map. If you were to start this map with your C level executives then you would have the name in the company in the center.

For example, say you're mapping for IT Project Management role in an IT department. You would place Project Management as the center section while each additional trunk off the main idea would be the major components of the Project Management role. This information is identified and facilitated on the map by the members present in the mind mapping session who are calling out the responsibilities of each trunk. The below example is a mind map created for an IT shop I was consulting several years back. The participants were allowed to take the conversation as deep as they wanted without the worry of political fallout or conflict. Recommendation - I often do not invite managers to the meetings as they will tend to take control of the conversation. Managers tend to not want to discuss what structure really is but what they think it is. This does not facilitate an honest open session and can prohibit real improvement from occurring. If you feel management needs to be involved I would encourage setting up a mind mapping session with only managers who are peers and allow them to speak freely. Additionally I do not recommend sharing the results between groups. The best test on the delta between the two groups is to have them create their maps organically and independently of each other.

IT Department mind mapping of the Project Manager position

Automating Lean, Be Careful.

noreply@blogger.com (Patrick Phillips) — Wed, 23 Dec 2015 20:38:00 -0700

Let me first define what this post isn't. This post is not arguing that you should not lean up through automation (Although Deming would have a field day on this topic). Rather I argue that when starting a new lean culture you should not automate the visual indicators (visual controls) of the process. Visual indicators broadly include any intuitively-easy-to-understand system for monitoring and controlling a process — with examples ranging from kanbans to painted golf balls — but most common is the visual control chart (http://www.systems2win.com/solutions/VisualManagement.htm). The purpose for visual controls in lean management is to focus on the process and make it easy to compare expected versus actual performance. Introducing a Lean lifestyle to an organizational culture is both exciting and frightening at the same time. Exciting because the firm can squarely focus on value delivery and consider value in a frame they likely have not done. Frightening because the concepts and activities which are adopted commonly share the culture to the core. The tendency when in a new process is to try to automate as much as possible. Don't.

When creating a lean culture the shift which occurs is to frequently use visual controls to measure constraints. Creating a dashboard on a computer or email provides value but is too easily ignored in a immature process. Hands on manually created visual controls instill habits that support Kaizen.

In the book 'Creating a Lean Culture: Tools to Sustain Lean Conversions' David Mann suggests. "The visuals reflect frequent readings of the health of and adherence to the lean design. And, of course, the visuals record misses in the newly transformed process. Establish a standard accountability process through which the misses are converted into actions that sustain and improve on the transformation, as described in Chapter 5. Now you have elements of standard work for leaders that Go to the visuals regularly to verify they are being completed consistently, in a timely manner, and with appropriate specificity. Conduct the standard accountability meeting with the visual tracking charts or their data brought into the session: – Ask about the misses recorded on the visuals. – Make assignments to understand and act on the causes of process misses and system breakdowns, as well as assignments based on your and others’ observations in the area."

Again Mann implores "You might ask: “Aren't all these visuals a lot to maintain?” Not if there is a systematic process for maintaining them. In fact, that is one of the main contributions of standard work for leaders. Team leaders either do or do not make entries on the visual trackers as specified by their standardized work. Supervisors’ and value stream leaders’ standard work directs them to review the visual controls several times daily (or at least once for value stream leaders) for two reasons: one is to verify the visuals are being maintained. The second is to verify that appropriate actions have been initiated when abnormal conditions are identified on the visual controls. When considered in total, there indeed can be lots of visual controls in a value stream or entire facility. But each visual is singular. A single person is accountable for executing it. One or two or more people have specifically designated responsibility for verifying its maintenance and for taking action if it slips. And any of these visual controls is simple, straightforward, can be interpreted at a glance, easily audited, and diagnosed. Put that together with the simple, unambiguous definition of responsibilities for maintaining and using the controls and the system looks much more manageable, as it is in actual application."

From an IT perspective, visual controls might seem like an embarrassing return to the information Stone Age. Visuals are usually not very snappy looking because they are maintained by hand. People are actually counting things (how many pieces do we expect in this load; how many are actually in it?) and writing them down. Have these people not heard of computers and barcode scanners?

Lean processes are designed not to rely on the extras stashed away in conventional systems to bail things out in a pinch. Even so, things go wrong in lean systems just as they do in mass systems. By design, a lean process has little unaccounted-for slack in the system to fall back on. Because of that, lean processes require far more attention to disciplined cycle-by-cycle operation to ensure the process stays in a stable state. Otherwise, the process will fail to hit its goals and fail to deliver the business results so important in any kind of production system. Paradoxically then, in many ways, simpler lean systems require more maintenance than conventional systems. The way to stay focused on maintenance is to manually control the indicators and constantly define what's moving the dial.

Overall, the lean management system favors hand-completed visual controls because of its bias toward pitch-by-pitch focus on process and the importance of everyone involved in a process having timely information about how that process is performing. When information is available to only a select few, whether managers or specialists, only those few can take responsibility. Indeed, only those few have the information base for thinking about why the process performed as it did, what the causes of that performance might have been, and what might be done to eliminate the causes of interruptions or to improve performance from its current level.

When thinking about visual controls think about their purpose. What habits are you trying to control and what habits are you trying to break? How different is accountability when controls always visible and updated? Remember this is uncomfortable because it's new. Often people accuse these indicators as "common sense". We know they aren't common sense otherwise most organizations would organically be using them. Visual controls support visual lean management. While lean management is the number one driver for lean success, visual controls server as a fuel lean practitioners can use to build their lean culture .

If You're a Service Based Company You're Full of Waste

noreply@blogger.com (Patrick Phillips) — Wed, 16 Sep 2015 23:30:00 -0600

Service industries mostly ignore lean's tremendous transformation potential. This is because it's very difficult to differentiate the difference between work product and waste. For many service organizations (e.g., insurance and banking) as well as some office functions within manufacturing supply chain organizations, information is the work product. In any case, because information enables behavior, there is direct bottom-line impact from improvements made to information systems when these changes reinforce appropriate behaviors. However, with some tweaking of the tools, lean principles and concepts apply equally well in service settings.

There is often substantial resistance to change in service organizations. I would argue this is multiplied in service/office environments because often lean failures occur in large part because of management's lack of patience for the the proper growth along the maturity curve. The inability to physically see waste makes managing it's elimination even more difficult. The answer is to create patience and visibility through events such as kaizen workshops which can break through cultural barriers and help nudge change along. Another obstacle is that customers are often part of the process. Stopping a process in its tracks to apply lean with customers can be difficult. But, events can make it easier by pulling people off the front line and placing them into the transformation process where they can be invisible to customers. For example, a customer should not be told by order fulfillment to wait an extra week for shipment while improvements are being made. Similarly, a restaurant does not expect to drag its patrons into the kitchen to participate in its redesign.

Direct observation of work is one of the most challenging lean skills to master when dealing with service based firms. Practitioners must be able to observe a process and truly understand how the activities, connections, and flows of the process are linked to the results. A manufacturing environment lends itself to the practice and development of direct observation. The process comes alive like a ballet with the motion of people, equipment, and material. But it is much harder to observe processes for service tasks, such as accounts payable, requisition fulfillment, or evaluations. Tools such as process mapping can help develop observation skills. However, in service organizations, what people do and the product, information, or service are often on different tracks. Instead of leading to a better process, putting two distinct processes on the same map only causes confusion. Separate maps can be used to explore different aspects of the process. An activity map captures people's actions. A product/process map captures what happens to a product or service. As an organization captures current reality, it needs to look at how it designs and executes activities, connections, and process flows.

According to Hitchicker's Guide to Lean "applying lean in a service environment is just plain harder. Service processes, which are cross-functional by their very nature, can be difficult to see, and documentation and measurement are sparse. However, the results can be astounding. To get a sense of the potential, here is a simple value-added test. A value-added activity is defined by three strict criteria: 1. The activity must be valued by the customer who is willing to pay for it.

2. It must change the product or service.

3. The activity must be done right the first time.

In a service organization, problems are less visible. That is because the buffer, the thing that shields the organization from little problems, is not a tangible element, such as inventory, but something more elusive: time. Instead of working around problems a service organization must make them visible and create structures to force workers to solve problems as they occur."

Flinchbaugh, Jamie; Andy Carlino (2006-01-02). The Hitchhiker's Guide to Lean: Lessons from the Road

Let's take an office environment as an example in this case. Overprocessing waste can sometimes be hard to detect, because it is often disguised as "we are doing more for the customer." But processes that exceed what customers value, yet offer no benefits are, indeed, waste. In a manufacturing environment, people can readily discover and eliminate overprocessed features. In a service setting, however, overprocessing examples are subtler and can seem insignificant; but small improvements can add up to major savings.

As we continue to find faster and better ways to manufacture products, deliver services, process information, etc., the knowledge workr will increasingly be required to process data more accurately and faster than before. Therefore, information must effortlessly stream cross-functionally throughout an organization. Additionally the focus must be not to create waste within these functional groups. The knowledge workers in these groups will need to learn and adapt new software applications to meet the ever-changing business related requirements. A “Lean” power user is someone that does that but also incorporates Lean tools and concepts while learning and working with new applications. Many organizations are ‘drowning’ in how to manage all of this and at the same time meet customer demand (internal or external) while ensuring the employee is not stressed. Furthermore, many employees may not have had adequate training on the suite of products or other applications that may dramatically improve information flow, and subsequently office productivity.

The following are some common data and information flow questions and situations that today’s employees struggle with that can be an identifier of waste in the office process:

“My Inbox is drowning in emails. How do I establish standards that will reduce email traffic?” “I often double or triple handle a single report because I don't have all the information when I need it.”

“It seems I spend half my time requesting information from one department or another because access rights are not granted or no one has trained me on how to obtain the needed information from their system. It’s frustrating that we are not all integrated.”

“My Desktop filing system is a mess. I just save files to my C drive or Desktop.” “How do I categorize my files and emails, and then ‘automate’ where they are saved?”

“My computer screen is littered with icons and junk I don’t use. It’s hard to find what I need.”

“When staff go on leave, other staff in the same office do not know how to find the right document or information even though it is stored on a shared drive.”

Applying Lean in an office environment will achieve reduce waste. The problem with office waste is that it's everywhere. In fact it's so common that if you were to parallel it with manufacturing waste you would likely need more warehouse space the hold the waste then your material.

Value stream mapping is an essential tool for identifying and measuring the impact of information waste on process outcomes.

But for many service organizations (e.g., insurance and banking) as well as some office functions within manufacturing supply chain organizations, information is the work product. In any case, because information enables behavior, there is direct bottom-line impact from improvements made to information systems when these changes reinforce appropriate behaviors.

Lean organizations focus on providing value for the customer. In a manufacturing environment, the process does not directly touch the customer; it creates the products that touch the customer. In service organizations, however, value and process are often one and the same. The customer is typically the beginning, middle, and end of the process.

From the customers' perspective, value should be more than a design activity. It should be an everyday lens. A service defect is a major customer problem. But a service organization can not just inspect the end results of its processes. Because the customer is so close, every employee action is a chance to either provide or destroy value. Starbucks provides more value than a cup of hot coffee. Each store provides a comfortable, convenient, and reliable environment. And they can charge for the extra value. Not all coffee drinkers value or are willing to pay for the Starbucks experience, so they go somewhere else. Whatever the service, it is important to deeply understand how different types of customers have different needs. By understanding these different audiences, a business can customize its processes and services to offer the right kinds and amounts of value to each subgroup.

To design around the customer and give them what they want, an organization needs to consider what impact its processes have on customers. How much of customers' time does an organization waste by making them wait for service or rework? How many times does an organization ask its customers to provide the same information over and over? For example one major airline asks all of its qualified passengers that check in on-line or at a kiosk whether they would like to upgrade to First Class - before the reservations system checks to see if First Class seating is available or even an option. Each request only takes about 15 seconds; but each 15-second delay is a painful reminder that this airline does not value its customers' time.

For an organization offering products and services that are considered necessities, it is not as critical to infuse them with value. But an organization that provides necessities needs to pay particular attention to how it consumes its customers' money - and especially their time. Time is the currency of the 21st century. In designing around customers, it should be considered that, to a degree, time often has greater value than money. A person can always get more money, but lost time is gone forever. The moral: do not waste customers' time. "Factor Five: Events are Necessary

Lean is not about events, it is about everyday behaviors, skills, and thinking. But events help create the right environment and deliver results. There is often substantial resistance to change in service organizations. Events such as kaizen workshops can break through cultural barriers and help nudge change along.

It is usually difficult to deploy lean practices and skills in service settings. One obstacle is that customers are often part of the process. Stopping a process in its tracks to apply lean with customers can be difficult. But, events can make it easier by pulling people off the front line and placing them into the transformation process where they can be invisible to customers. For example, a customer should not be told by order fulfillment to wait an extra week for shipment while improvements are being made. Similarly, a restaurant does not expect to drag its patrons into the kitchen to participate in its redesign.

When customers can be involved in the improvements, there is a lot to gain. Not only will an organization's processes be improved, but the customers' experience can be improved as well. Working side-by-side in the war against waste can help an organization build camaraderie with its customers. The downside is that the organization could risk exposing too much of its inner workings and dirty laundry; if customers do not like what they see, they may not wait for improvements. An organization needs to balance both sides of the equation to see what works best.

A word of caution: while events are necessary, an organization should not over-rely on them. Otherwise, events may become the only mechanism for change, which severely limits an organization's potential for performance improvement. Some early events should focus on creating a living lean model. In a retail company, a single storefront may serve as the lean model. In an office setting, it might be one element or flow through the organization. To help explain lean and get employees on the lean bandwagon, living models are far more effective than theories, words, or training alone. By focusing on a small area or department of five to 20 people, an organization can quickly create a living example of what lean could look like across the enterprise - and thereby accelerate the journey for the entire organization. Living models also serve as laboratories to test applications, experiment with implementation options, and help anticipate issues the organization will face when it undertakes a broader transformation."

Flinchbaugh, Jamie; Andy Carlino (2006-01-02). The Hitchhiker's Guide to Lean

Technical Debt, It's all Around Us.

noreply@blogger.com (Patrick Phillips) — Thu, 12 Mar 2015 10:45:00 -0600

Technical debt. The term has been popular for a while and is used to refer to a lot of scenarios. In my experience, one of the most overlooked forms of technical debt is created when operational support requirements are excluded from the project life cycle.
In many companies, operational support is not considered part of the project life cycle. Operations and project are often completely decoupled at the lower and middle levels of the IT department, only dovetailing because both divisions report to the CIO or VP of IT. Often it’s this very component of the life cycle which delivers the most value to the customer.

This disconnect is created when communication between IT and the rest of the business is limited. When the business defines objectives and timelines for code project with limited or no interaction with the operations team, the operations requirements that are needed to support various projects are presented in an abbreviated form or left out entirely. The project team might not even know that operations requirements exist until the code is almost ready to go live, if then.

I recently participated in an emotionally-charged meeting that was scheduled to review the root cause of the failure of a client-facing system. The project team was angry with the operations team for not supporting their code in a highly-available (HA) environment. The operations team was defensive, stating that they didn’t have the time or resources to address their backlog, including the HA environment.

The project team specified an HA environment in their runbook as part of their handoff to IT operations. The HA system was acknowledged by the operations team as a requirement to adequately support the live code, prioritized and assigned. However, the HA system’s completion was not considered release-gating by the project team, so the project was declared complete as soon as the code was live.
The project team expected their live code to be considered part of the production system, with accompanying up-time SLAs. The IT operations group was working on the HA environment, but didn’t have dedicated resources on the project, so its completion was a long, drawn-out process. The same people working on HA were also doing regular maintenance tasks, working on systems for other projects, and putting out fires. Again, where in this dispute does the customer value delivery exist? Doe most IT departments consider customer value when negotiating this type of delivery?

Part of the miscommunication was created in the beginning of the project, when people from the operations team were not included in the project team. It was exacerbated when the code was permitted to launch without an HA environment. It really snowballed when the project team went on to the next project not fully delivering the value of the code in terms of the delivery life cycle. The operations team, with its own unique requirements pushed code live without ensuring that the requirements were completed, and then repeated the pattern all over again.

After just a few project lifecycles, it becomes clear that the decoupling of IT operations requirements from business requirements within consecutive projects creates a backlog for IT operations that can’t be
surmounted without drastic remediation efforts. Futhermore this lack of oversight often reveals a lack of understanding of value delivery life cycles. When domains are permitted to hand their delivery over the fence to the next group they tend to value less quality over quantity.

Fortunately, this problem has a simple solution. It’s not easy, because it requires being realistic about how many projects your company can complete in a given amount of time. If you have are in the habit of ignoring IT operations requirements, you might be surprised at how much paying attention to them will slow your project completion rate. You might have to be realistic about the number of operations people you truly need to support your project work. You need to understand the value your creating for your customer is not realized until what you have developed is fully implemented and the customer is finding the value in it. You have done nothing relative to value delivery if you’re not ensuring the product you’re delivering is delivered in full.

In summary, pay attention to three key aspects to prevent a buildup of technical debt as a side-effect of project work:
1. Make operations requirements release-gating
2. Don’t launch on temporary environments to get the product out. Deliver your product to deliver value not presence
3. Bring operations people into the project early and often in the life cycle. In fact make them part of the life cycle if you want to succeed early.
Projects are not complete unless the systems on which they live are complete and delivering value to the customer. Anything not providing value to the customer is considered waste. Be the change agent in your organization. Stop throwing anything out to the client to see if will work. This isn’t fishing.

The Great Waste - The Underutilization of Human Potential

noreply@blogger.com (Patrick Phillips) — Tue, 23 Sep 2014 14:22:00 -0600

Arguable one of the greatest wastes in corporations past and present is the gross underutilization of people’s talents skills and knowledge. In our knowledge-based economy, effectively developing and applying intellectual capital is the key to creating value. This waste of intellectual capital of tacit knowledge is what I call the Great Waste. Of all the types of lean waste this waste likely has the largest economical and social cost.

Turf wars, politics, red tape, budget nepotism, envy, ego, greed, cronyism, short-term thinking, and rapid changes in strategic direction for no apparent reason must be removed from the culture and replaced with the fuel, the tools, the resources, and the attitudes that drive the innovative process. Any organization, whether a for-profit business, a nonprofit organization, a government agency, or an academic institution, that has a culture where there is a direct or indirect, explicit or implicit, stated or whispered vested interest in keeping things exactly the same to produce continuity and to win the elusive prize of job security will surely die a slow death and will never be a place where creativity is cherished or innovation is harvested.

Cultures of innovation are places where creativity is celebrated, rewarded, and cherished at all levels in the organization. When teams are truly inspired and passionate about their work, they are much more likely to discover and to dream without the fear of “extra effort” or discretionary time (e.g., time and effort expended in the workplace beyond what is typically expected) that innovation can flourish and valuable crops can grow.

We've all heard stories about people leaving organizations who didn't value them. The concept that people don't leave companies as much as they leave their bosses often rings true in most separations. This is unfortunate for many reason. Particularly troubling to me is the lack of value placed in employee's tacit knowledge. For example Below is a post I read several days back from an employee leaving a particular firm.

"After 10 years, Today is my final day at XYZ Company! I honestly thought I would retire from XYZ but the past year has been less than easy. All in all, I'm just sad! Sad that things weren't handled differently, sad that a job I truly loved has become so hard to even get out of bed and want to come to, sad that no manager will ever hold a candle to the one I've already had, sad that my mom devoted her entire career to one company that has crumbled without her, sad that the close net family environment we had has disbursed into all different directions, and sad that power and greed made some people I trusted show their true ugly colors! As I move on to a new adventure, I choose to remember the good times and the amazing people XYZ brought into my life. We have shared way to many laughs and tears, attended each others weddings and showers and have watched our children grow. We have celebrated birthdays (dancing on pianos), supported each other through marathons, retirements and divorces. Through cancer treatments, pregnancies, surgeries and deaths. We were a family! I have been blessed to work with my mom, my sister, my best friend, and with the many other life long friends I have met through work. I will miss seeing so many of you day in and day out... Please stay in touch!"

This is a post from someone who loved his company. Someone who figuratively considered his co-workers his family. So much so that he recalls personal outside of work events that showed his commitment to this firm and his family. What was his potential? What could have brought to the firm had he been fully allowed to provide his value. Granted there are two sides to a story but anytime an employee with this type of commitment leaves it's a failure of the firm. Why did this employee not have the opportunity to be fully engaged? What customer value is now forever lost because of the inability for this employee to be engaged?

There is a world of difference between doing a job and wanting to do a good job. There is a world of difference between wanting to do a good job and really putting your back into it. There is another world of difference between hard work and dedicated hearts and minds. Do you want people to go the extra mile in your company? Do you want them engaged in their work , putting their heart and soul into what they are doing, dedicating themselves to the success of the operation, and making a strong commitment to achieving the best results possible? If your answer to those questions is ‘yes’, then let’s ask what are you, and what is your organization , doing to make people want to do that bit more. What does your leadership do to capture their hearts and minds?

The problem according to the book Employee Engagement and the Failure of Leadership is that "anything resembling employee engagement is rare. In a 2008/ 9 study of 600 UK organisations 8 , the Work Foundation found that: 49% found sickness and absenteeism an issue 33% had problems with staff retention 33% felt staff underperformed 25% experienced ‘presenteeism’ - de-motivated uninterested staff A 2008 Gallup study found 9 that only 29% of US employees could be said to be engaged while 17% are actively disengaged. The 2009 Ipsos Loyalty Study found 10 less than 30 % of US employees to be loyal to their company while even fewer thought their employer deserved any loyalty." West, David (2012-03-15). Employee Engagement and the Failure of Leadership

It is not that people don't want to get involved. A few employees no doubt have no interest in whatever they do but the great majority are anxious to believe in what they spend a rather large slice of their lives doing. The issue is that management just makes it so difficult. Senior management, in particular, has become one of the major factors hindering employee engagement. Senior managers appear to inhabit a different world.

As Drucker argues in Management Challenges for the 21st Century 132 "Knowledge worker productivity is the biggest of the 21st century management challenges. In developed countries it is their first survival requirement. In no other way can the developed countries hope to maintain themselves, let alone maintain their leadership and their standards of living."

You have to decide one thing first. Are you committed to the planning, organizing, directing and controlling paradigm or not? If you believe that what is happening today is a passing phase and that the world will get back to stability, logic and order quite soon, then there is a vast array of planning models— and indeed talent planning models—available to you.

Laughter may be a sure sign that a paradigm shift has occurred. The new world, the one that Lawrence Klein could not plan, is not a world in which management knows and employees obey. It is a world in which the idea of control, job descriptions and skill sets are about as useful as an investment in sub-prime mortgages. If you are willing to accept the new paradigm, then you will accept the need for development and growth and factor this into your management. You will accept a degree of job hopping but seek to make this happen within the company.

The skills employees seek are not specific to a job according to David West. "They are more what we might call personal skills or even what Stephen Covey might call habits. The knowledge based organization will look for resources who:

foster thought processes

ask questions

experiment

solve problems

improve things

value ideas, efforts, and contributions

be self-regulating

observe insightfully

innovate constantly

be articulate

take initiative

have pride in the community

show kindness

exude confidence

excel in teamwork

share successes

do what they say they’ll do

pay close attention to every idea

follow up "

LET PEOPLE BELIEVE If the pay is poor, the conditions of employment unfriendly, the supervision untrained, the management uncaring, job security unlikely and status low then it is obvious you have a prescription for staff turnover and absenteeism. No such jobs? Don’t be so sure!

In 2010, the CIPD reported that employee satisfaction was at an all time low.

Intrinsic motivation is so much more important than extrinsic.

There is a world of difference between doing a job and doing a good job.

There is a world of difference between doing a good job and putting your heart and soul into it. People do want to feel engaged.

The great majority of employees are anxious to believe in what they spend a rather large slice of their lives doing.

The trouble is that management just makes it so difficult.

Ensure that people in the organization are doing things that enhance their lives.

If you are a manager, ask yourself why you stay in your job. If you love your job, ask yourself how you can engender the same feelings in the people who work for you.

Employee engagement is not a program that someone (HR?) can take care of while line management get on with the job (which would be what exactly?)

Unless you are prepared to change the way you lead, you will end up with just another program. Such programs, with the exception of TQM, have no effect whatsoever on engagement. People are now immune to programs.

The attempt to engage employees in their work is not a process isolated from management and leadership. It is management and leadership. It is primarily what managers are for.

The only correlation with employee engagement is with a company culture which genuinely prizes people and their involvement.

Engagement depends upon organizational values, culture and management style.

If you are convinced that top down management is right, then keep clear of employee engagement.

You see, the specific job skills that people have today may well be relevant today. They are unlikely to be as relevant next year and will quite possibly be irrelevant a year after that. If you stick to job skills and job descriptions, redundancies are almost inevitable. However, the mental skills of asking questions, experimenting, problem solving, improving, observing , taking initiative and the personal attributes of idealism, creativity, caring, imagination and ethics are always relevant. If you think that the change rate will continue; if you think that control is no longer the be-all and end-all; if you think that training is out but learning is in; if you think that planning is a joke but opportunism is where it’s at, then you have to find enquiring minds with strong ethics. That’s talent.

Again according to David West, "Employee engagement is the single most serious issue in management today. Its apparently inexorable decline will soon spell the end of Western economies. If you cannot compete on price (and the West cannot) you must compete on creativity and quality. Without employee engagement, neither of these is possible.

Employee engagement is not the result of some initiative quite detached from leadership. It is not something that someone (HR?) can take care of while line management get on with the job (which would be what exactly?)

The commercial organisation is the primary way that we bring together people, investment and raw materials to create economic growth, products, jobs and, equally importantly, human well-being and satisfaction. Profitability enables this social purpose. Such organisations are not for short term gains or making CEOs rich, attitudes which have brought capitalism to a crisis point.

Most employees in most organisations seek to do their best, often in spite of management, much of which disengages people, adds useless cost and serves as grist to the cynics’ mill. This applies equally to not-for-profit and public sector organisations.

The only way is ethics. If employees are to feel engaged with a company, they need to feel proud of it. Only a company that takes a positive view of ethics can expect employees to find compelling purpose in their work." West, David (2012-03-15). Employee Engagement and the Failure of Leadership (248-249). St Laurence Press.

How IT Can Stay Relevant Utilizing Lean Principles

noreply@blogger.com (Patrick Phillips) — Wed, 25 Jun 2014 17:05:00 -0600

Today in business it's not uncommon to see a diverging opinion of the value information technology (IT) delivers. Often the gap is fueled because IT executives have unique sets of challenges and complexities which cause them to focus on different deliverables from that which their business counterparts expect. Most IT leaders evolved through the traditional IT ecosystem and haven't gained the business experience which their peers have in focusing on value delivery. This chasm is commonly the cause of the movement for IT leaders to get a "seat at the table" or "more in tune with the business." I completely understand this effort but i've always been a bit humored at the effort to have an executive work towards just getting a seat at the leadership table. Unfortunately it's very common in technology to keep the leader hidden in the closet keeping everything running. Regardless, IT is more relevant than ever but must adapt it's value position or it will find SAAS providers invading their domain.

Over the last 10 years there has been a positive movement within IT organizations to focus on value delivery (agile, kanban, lean). Consistently we hear of two types of IT, firefighting IT and what I will call innovative IT. Firefighting IT is waking up daily mapping the fires they will fight just to keep the lights on or the business running. What a horrid way to live your life. Innovative IT on the contrary positions themselves as a value add to their business peers by continually finding ways to innovate. Or

in other words an IT organization that strives to continually improve and deliver value to the organization. Firefighters live the IT of the 90's. Often it's not always their fault they spend time keeping sins of the past running. Old technology which requires life support is a drain on innovation. Firefighters are so busy keeping the plates spinning they never have time to say yes to new projects. The majority of IT groups find themselves in this second group and socializes themselves as a cost center. Firefights justify their value through concepts such as Total Cost of Ownership (TCO) or at best a cost benefit analysis.

Innovative IT sees themselves as part of their business and always looking for opportunities to improve their value delivery through seamless integration within the business value streams. This effort requires effective management systems that prioritize work and align daily activities with those goals and objectives that are most important to the organization. The focus of management is to create stable processes and standardized work which consistently deliver value to the customer. To be sustainable it must be simple to understand and execute, providing guidance while not getting in the way. It cannot be too controlling or rigid; otherwise, it will suppress creativity and learning, hindering improvement and innovation. Wow, you say. Great to think that way but impossible to do. Not true, you can do this and you can make your mark but utilizing lean concepts.

Steve Bell and Mike Orzen in their book Lean IT elegantly define this concepts by saying "Lean IT engages people, using a framework of Lean principles, systems, and tools, to integrate, align, and synchronize the IT organization with the business to provide quality information and effective information systems, enabling and sustaining the continuous improvement and innovation of processes. Lean IT has two aspects: outward facing, supporting the continuous improvement of business processes, and inward-facing, improving the performance of IT processes and services." Bell, Steven C. (2012-01-04). Lean IT: Enabling and Sustaining Your Lean Transformation

This is a hard balance, IT organizations are always faced with threats from outside and inside. They have to consistently protect themselves from risks that can literally produce threats to their organizational livelihood (think Target). Additionally SAAS based tools such as SalesForce.com have created scenerios where IT may be defending its existance from providers who can continually deliver cheaper and better (For more on this). Finally, IT groups have developed a complexity about them that makes it hard to manage let alone innovate. These challenges are not lost on most IT executives. In an effort to deliver software faster (faster value delivery) agile has become an industry in its own. Although agile is an exceptionally valuable tool it tends to reside more in the activities in the value stream and less a responsibility of leadership (this is open for debate but for this discussion I will leave it alone).

When new leaders or managers come along and try to innovate they are often countered with comments such as "This is the way we've always done it." or "Our business is different." The pace of change in IT is exponential relative to the business change so not only must IT provide service today. They must support the legacy of yesterday while planning for tomorrow. Additionally they are akin to rebuilding the jet while in flight every time they plan to initiate a new technology or process. It is no question why IT and their business partners can be misaligned. Based on these constraints there is not a better group to utilize lean principles then IT.

Lean IT enables a simplified, visible track for business process change throughout the organization, focused on delivering value to the customer. Lean IT is identified through (PPT)

People - Only through people do we (working in cross-functional teams) identify the problems and their root causes, which are often found in the process itself and not the technology.
Process - When the process is improved (and often simplified), the people may find that the supporting systems can also be streamlined or removed altogether. And when system changes are required to support the process improvement, the future state of the process (defined by the team) helps to articulate system requirements, while the team guides their design, selection, development, implementation, maintenance, and support.
Technology - To focus of your team is through IT but it can only be done first through your people and your processes.

The focus of Lean IT as described above will need to be your lighthouse constantly. PPT can never take a back seat to the perceived threat of the day. There are countless books and consultants who can show you the tools to create a lean framework. Be warned the tools don't maintain your journey towards lean IT. Again Steve Bell says "You must create a system of lean management which in turn shifts your culture. A cultural shift will support long term sustainability towards lean. Introducing Lean

management and information systems requires discipline, time and reflection. Lean principles are even more difficult to embrace, yet they eventually come to influence behavior throughout the enterprise. Values and principles must have time to become internalized within the unique culture of each organization. Nonetheless, it is difficult to begin with values and principles alone, because they are intangible. In order to achieve a sufficient escape velocity and trajectory, an organization should launch with a focus on problem-solving tools, then bounce off the atmosphere established by successful pilot projects , giving the organization time, momentum, and confidence to develop sustaining systems and principles. Bell, Steven C. (2012-01-04). Lean IT: Enabling and Sustaining Your Lean Transformation

Look for more on this subject on the essential systems required for a lean IT transformation. Please let me know your experience and if you are looking for a great resource of information please take the time to read Lean IT.

Who is Responsible for Quality in IT (Or Any Department)?

noreply@blogger.com (Patrick Phillips) — Sat, 26 Apr 2014 16:26:00 -0600

When Edward Deming, the Grandfather of Quality, taught his methods to the Japanese in the 1950's, he was working with a group that had historically been known for poor quality. Invited by the Japanese Union of Scientists and Engineers to assist Japan in their post-war reconstruction efforts, Deming taught Japanese management, scholars and engineers to focus on quality in order to produce world-class results and become competitive in world markets.

Japanese Leadership

During his early lectures, Deming quickly realized that quality cannot be sustained unless an organization’s

leadership focuses on its importance. Initially, he lectured plant managers and engineers who had no authority to implement change. When Deming consulted with his Japanese hosts, they understood the problem and arranged for him to speak to about 100 top-level business leaders.

Deming instilled in these leaders a sense of responsibility for quality in their organizations. He maintained that, ultimately, quality is created in the boardroom and is the responsibility of top management. With senior management supporting quality efforts, the Japanese companies and economy would flourish.

Japanese Success

Deming predicted that Japanese companies would export their products all over the world and companies in other countries would be clamoring for trade protection from the Japanese within five years if they followed his recommendations for improving quality. Although the Japanese business leaders did not initially share his vision, they did as he instructed so they would not lose face. Japan surprised the world with their success and even beat Deming’s prediction by a year.

You probably know the rest of the story regarding Japan's success and what American organizations had and still have to do to catch up with Japanese firms. American firms confused quantity with quality. Demand for American goods was so high in the 50's and 60's the American manufacturing companies assumed this translated to quality for the customer.

However, this misconception was created from the great economies of scale available to American companies due to the war engine. At the time, the United States was the only country in the world which could produce at levels necessary to meet demand. As soon as Japan could both meet demand and offer higher quality, American companies fell behind in world markets.

Putting Out Fires

I have found that many IT organizations function similarly to the manufacturing model that existed before Deming’s quality movement. They judge the quality of their product, IT services, by the demand for that product.

For example, when a system goes down and IT team members scramble to get it working again, companies reward this behavior by praising the heroes who got up in the middle of the night to fix the issue. These individuals are suddenly visible and valuable. They are motivated to continue putting out fires rather than to improve system stability. The incentive to become system arsonists is greater than the motivation to create quality systems.

Continuous improvement is a hard sell for some IT professionals because doing a quality job means nobody notices IT. The better the systems run, the fewer chances there are for heroics. A quality IT group is almost invisible.

Deming’s 14 Points

Below are Deming’s 14 points for management transformation. They were originally published in Out of the Crisis by W. Edwards Deming.

Although the 14 points were written for a manufacturing scenario, try to translate the recommendations into ideas for an IT team. Following these points in your IT group can help you focus on making quality everyone's responsibility.

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means abolishment of the annual or merit rating and of management by objective.

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

Deming’s 14 points transformed manufacturing into a quality-focused delivery system. The same benefits can be realized in IT, creating continuous improvement in IT processes and products. When quality is built into your IT systems you can increase the value of your department to the business, decrease time spent on downtime and reduce the load on team members who have to fix problems caused by a lack of quality.

The Journey Toward Quality

I realize I am not giving much in the way of suggestions for translating the 14 points into action but I would encourage you to study how you can facilitate making quality core to your business.

All the excuses you will hear from your team about why these 14 points won’t work in IT are probably the

same excuses manufacturers made before they made the shift to quality. The arguments have already been made and overcome and the benefits of following the 14 points have been clearly demonstrated.

If you haven’t started the journey toward increased quality and would like help, feel free to reach out to me. I can provide you directions to start. Good luck!

The Future of Leadership and their Role in Value Delivery

noreply@blogger.com (Patrick Phillips) — Mon, 21 Apr 2014 21:25:00 -0600

The proliferation of process methodologies has not only made the traditional form of managing more uncertain, but has greatly increased the consequences of uncertainty for managers. Value based methodologies emerged as a way to manage and even turn these uncertainties to the organization's advantage. There are countless ways these methodologies define value, but all methodologies have one commonality which they share to ensure long term success. Leadership and leadership support for value based change initiatives are the number one variable for success or failure of any such initiative. This post will explore how unconventional leadership supports change in your organization and how

with thoughtful planning and support you can avoid the most common points of failure.

Traditional command and control structured organizations are often not effectively designed for allowing leaders to adequately promote value delivery. Traditional organizational structures are also not fruitful at turning managers into effective leaders. Neither are they designed at empowering their workforce, rather they tend to focus on hierarchical decision making which promotes a command and control mentality.

Value or value creation can be viewed three ways. The customer must value your product or service and be willing to pay for it. It must change the product or service. Finally, it must be done right the first time or keep getting worked on until it’s successful. Many frameworks do a great job focusing on these three areas. Although frameworks are great tools at enabling value delivery they can only be utilized if the culture and environment fosters and promote value delivery at every level in the firm, including the individual. Using Pareto’s law we can deduct that tools/frameworks only represent 20% of the ability to deliver optimal customer value while leadership empowerment and support comprises the additional 80%. In successful value focused firms 80% of the effort is expended on changing leaders' practices and behaviours, and ultimately their mind set. Senior management has an essential role in establishing conditions that enable the effort to succeed. Their involvement includes establishing governance arrangements that cross divisional boundaries, supporting a thorough, long-term vision of the organization's value-producing processes, and holding everyone accountable for meeting value driven commitments. This is accomplished through regular, direct involvement and understanding their role in empowering their employees (who should be considered your intellectual capital). Without this vision any value driven initiative (Lean, Six sigma, Theory of Constraints, agile) will only be seen as the flavour of the month.

Asking yourself “is your customer willing to pay for the activity you are engaged in” can provide tremendous insight when leading. Defining value in any other terms can undermine the potential of value delivery for the firm. Leadership often takes too much credit in the value of the organization when they often have created little direct value. The majority of the value delivered is through the product, services or placement of your firm’s competitive advantage. This means your greatest potential for value creation often resides in the employees who produce your competitive advantage. Historically to gain the ranks of manager one had to experience, learn and work in multiple domains of the organization. Rising the ladder through the learning curve of the organizational layers. This allowed managers to gain knowledge and experience which could be used to effectively lead and make intelligent decisions. Today management still rises through the ranks but often they lack the domain knowledge they would have previously gained. Rapid Technology changes make it difficult for management to have the same depth of knowledge as those they manage. The pace of change today has created a model where leadership is in stark departure from leadership over the last century. Traditionally organizational structure evolved as a product starting with the industrial revolution with influence from military modelling. A command and control model focuses on management making strategic and tactical decisions for their employees to follow without question. This method worked fairly well in highly controlled production environments which had little variability in their process.

Peter Drucker the father of Management predicted then observed a shift in the early 60's which indicated successful firms were putting more decision in the domain of their employees who work with the product. Product complexity and efficiency were creating an environment where production lines where much more complicated and variable and couldn’t be supported by command and control. With the emergence of service based industries it quickly became apparent that traditional management methods were out dated (although this had become equally apparent in manufacturing earlier). Successful organizations today understand the majority of tacit knowledge with tremendous potential resides in the knowledge worker. This is the same worker who under earlier models lacked decision making authority and operated as order takers.

What is the primary role of a leader today then? This question is asked far too infrequently, and when it is asked, the answers are predictable and often wrong. But it is a vital question, as without leadership, empowered employees will never get off the ground. Common replies include setting the vision, establishing priorities, and providing motivation. These are important responsibilities which are out dated. The essential purpose of a leader is to do one thing: create and empower change. Without a good leader, nothing changes. If a lean program, or any other program for that matter, is failing, it is probably not the fault of the tools. It is failing because of lousy leadership. As you embark on your journey, learn all you can about the concepts, practices, principles, and tools of your choosing. But remember, above all, the goal of these tools is value – and value hinges on leadership who promote and empower that change.

The knowledge workers need to be in control of achieving and promoting change. Therefore, the leader must convey to the worker that they are the ones who own the processes. Leaders need to empower people to have everything in place in order to perform. Only when they know and are empowered what to do will they feel accountable and take ownership of the processes. In organizations with traditional leadership behaviour, there are frequently policy deployment directions from senior management. The mind set of these leaders is not to involve the people at all. Therefore, people can’t relate to the KPIs (Key Performance Indicator) that cascade down because they can’t understand their contribution or the relevance of the KPIs. People in these companies can’t engage themselves in supporting their senior management in delivering results. Consequently any initiative which does not empower or utilize the input of the employee is more likely to fail.

for another paper). This might make sense from a traditionalist, but from a product-development-as-knowledge-creation perspective, this kind of thinking is plain wrong and even dangerous. Learning is the major value added activity in product development and knowledge transfer. In the long run, reducing learning will only result in loss in market share and a less valuable staff. Often management use the excuse that they have to assign resources to satisfy the customer first, which leaves them little or no time to make real change. Their bosses find it hard to argue the point (or use it as a convenient excuse themselves). Value based culture requires you to make the time to make the change—long-term planning and results versus short-term results with little planning.

All leaders have the ability to adapt to the new value driven leadership mind-set. However, not everyone will be capable of doing it without intensive coaching and support from their own leader or experienced external coaches. Even though initially some of these leaders will not feel comfortable in being a leader in this new system, not many of them leave or are forced to leave because, over time, most will understand the value and adapt to the new leadership system.

Not every leader nor every company culture is ready for this change in leadership mind set. Despite this, many companies have implemented value based tools and techniques for years with tremendous success (Toyota, Boeing, GE) . For example using a lean framework, Center for Ledelse interviewed 400+ companies concluding that only 7% had realized more than 80% of their expectation in their Lean program. This only confirms that these companies need to take action now in adapting Lean leadership behaviour and mind set in to their company culture. Every leader deserves a chance, but remember you will have to fight a lot of scepticism down that road (insert reference). You will likely need to convince the team members by showing them what is in it for them personally. People will change when they realize that their leaders really want to empower them. Leaders need to be consistent in what they ask for. They should not reduce their requirements. They should not change their communication. Consistency it required and we must accept the fact that it takes time sometimes many years for this change to fully reflect in the culture.

Dedication is required of each team member to strive for self-improvement. Commitment is needed for each team member to ensure the values and principles will be followed and the team

will hold itself accountable. Courage, because the emotions that empowerment invites, will be unlike anything the employee has ever professionally experienced. Avoid non-dedicated team members or “partial allocation.” A team member who is in multiple teams does not have the same commitment and shared responsibility as the other members. Part-time people equate to part-time commitment. Part-time commitment leads to team failure. To the maximum amount possible, all members are 100 percent allocated—fully dedicated to their team. The amount of management waste that disappears is amazing.

What you do from this point forward is exciting. The possibilities for your firm are endless. There are many sceptics who think value based programs cannot work for them. They are right, if they keep that mind-set then it can’t. There is no doubt the concepts presented in this paper can work for you. From the world’s largest auto maker to the smallest organization you can make this work. It can work for you, your vendors and even your customers. Take the time to explore your leadership potential and realize that anything is possible.

Enterprise Change Can Not Be a Project - Creating a Lean Enterprise

noreply@blogger.com (Patrick Phillips) — Wed, 16 Apr 2014 08:42:00 -0600

In my previous blog post Waste Is Everywhere and It Starts With You I discussed that constructing enterprise transformations are difficult for a variety of reason (yes and it usually starts with you). By definition an enterprise transformation is any series of organizational steps leading to improvements which create greater value to your customer and then your organization or resources. This post will assist you in getting acquainted with starting a transformation initiative and some common techniques you can use to navigate the politics which will block your success. Beginning a Lean Culture Transformation can not begin as a project. Let me explain, by definition a project has something with a beginning and and end. Regardless of how successful your organization is at project and project management at some point a lean project will have a completion date. At the point of completion what happens to your lean transformation? In the book Creating a Lean Culture we learn, "Culture is no more likely a target than the air we breathe. It is not something to target for change. Culture is an idea arising from experience. That is, our idea of the culture of a place or organization is a result of what we experience there. In this way, a company’s culture is a result of its management system. The premise of this book is that culture is critical, and to change it, you have to change your management system. So, focus on your management system, on targets you can see, such as leaders’ behavior, specific expectations, tools, and routine practices. Lean production systems make this easier, because they emphasize explicitly defined processes and use visual controls." Mann, David (2012-01-24). Creating a Lean Culture: Tools to Sustain Lean Conversions, Second Edition.1. First any change initiatives need to have top down support. This doesn't necessarily mean that upper management needs to manage the change but at a minimum they must fully support the change initiatives and be willing to change themselves. Additionally with the top down support you must fully tap your intellectual capital but I'll get to that later.
2. Create a blank slate. Do not come in to the initiative with a pre-conceived notion of what or how to change. Spend time if you need to getting people on board who can be objective and provide honest input. While being objective can be difficult, you will already have a room full of pre-conceived solutions if you do not take this step seriously. After all if you already have the solution to the problem why haven't you succeeded thus far in eliminating it? This is difficult additionally because most change initiatives within an organization are initially created because they want to solve a specific problem. In the end the original problem will be solved but TOC and mind mapping will eventually identify your root cause.
If you're new to this concept or your organization is very basic on conceptualization then start small. Perhaps do it inside your span of control or as a personal improvement plan for your commission It's very important that you involve all the intellectual knowledge available on the matter. If you fear this can't be done initially then narrow your first step to where you can have full access to that knowledge base. The largest disservice organizations can make is to not involve the knowledge workers and only involve management. Management certainly can participate but in today's world most intellectual knowledge is the tacit knowledge of your IC (regardless of industry I find this to be true. Peter Drucker initially saw this as early as the 1950's and it has only continued to be proven true). Getting the caveats out of the way allows us to finally talk about what is the first step. This stride can often be the most difficult because there are so many potential ways to begin (and fail). There are countless articles and books which describe how to create successful organization change and most are exceptionally good from certain frames. I find them a bit too prescriptive and often complicate something which should attempt to be simplified. Being too despotic out of the gate narrows the possibility of success when your case should need to deviate from their framework. My personal experience has proven that beginning with a mind map is a solid common method to define what previously only exists in your mind. The information you will discover in a mind map has likely never been mapped for your organization and your ability to learn from the experience is truly priceless.
Mind mapping takes what are often considered complex relationships between organizational components and allows them to be visually simplified. This method does a great job in minimizing what Chip Health and Dan Heath defined in their book Made to Stick: Why Some Ideas Survive and Others Die as the curse of knowledge. The curse of knowledge occurs when we assume others around us have the some comprehension of concepts which we often consider second nature or back of our hand. Alas we have a hard time often explaining our jobs, product specs or protocols to those who are not inside the organization day in and out. For example, if you ever have the opportunity to listen to air traffic controllers working, you will understand what I'm talking about. Their instructions to pilots are firm and concise but if you're not educated in to their protocol you would not have any idea what they are talking about.
For example, say you're mapping for IT Project Management role in an IT department. You would place Project Management as the center section while each additional trunk off the main idea would be the major components of the Project Management role. This information is identified and facilitated on the map by the members present in the mind mapping session who are calling out the responsibilities of each trunk. The below example is a mind map created for an IT shop I was consulting several years back. The participants were allowed to take the conversation as deep as they wanted without the worry of political fallout or conflict. Recommendation - I often do not invite managers to the meetings as they will tend to take control of the conversation. Managers tend to not want to discuss what structure really is but what they think it is. This does not facilitate an honest open session and can prohibit real improvement from occurring. If you feel management needs to be involved I would encourage setting up a mind mapping session with only managers who are peers and allow them to speak freely. Additionally I do not recommend sharing the results between groups. The best test on the delta between the two groups is to have them create their maps organically and independently of each other.

IT Department mind mapping of the Project Manager position

The facilitator of this session can be anyone but it's generally a good idea to use someone outside the group who doesn't have the curse of knowledge regarding the inner workings of the team. Additionally it's a good idea to make sure your facilitator is just that, a facilitator and not driving the concepts. Each trunk is a large concept that generally can't not be compiled to anything larger (agileists can recognize this as an epoch). When creating your mind map I encourage you to go where the discussion goes. This may result in jumping around to different trunks but it's unliekely people will be able to identify all components of one trunk at one time. Furthermore you will start to find that people want to quickly point out the problems when discussing items. Encourage this but do not dwell on it. Quickly put it in the branch and move on. Otherwise these sessions will get bogged down in negativity. The image above shows a trunk of Project Management and their role in facilitating as part of their job responsibility. Notice that concepts have been identified and some have the problem branch associated. This is as far as it goes, the purpose of this initial assessment is to understand current state, not to prescribe solutions.
This is step one for your transformation. If you want a more detailed example or have questions please feel free to contact me. I believe the power of this tool is so valuable that it should not be reserved for highly paid consultants. You should be using it daily to improve your job, department, company and life. In the next post I will show you how to identify problems or areas for improvement and how to put structure around that second step.

Defining a culture as a result of management systems by nature proves that you can not change a culture through a project. Ok, now that we know this starts as a cultural transformation how do we start our journey. There are many more cultural topics to discuss in this regard but for this post I want to focus on technical work which must be done. Standard lean advice calls first for stabilizing a process, followed by standardizing it, and then simplifying—or improving it. This advice also often applies to the sequence for implementing the elements of lean management. Organizations that attempt to start their lean management implementation with leader standard work often find it difficult and confusing. Their difficulty makes sense when you think about the unstable state of many conventional operations before a lean conversion begins. Leaders spend their days firefighting and expediting, especially in areas closer to the floor in factory or office processes. It is tough to create a stable, standard routine under those circumstances. Organizations find they cannot make leader standard work effective because the leaders are constantly being pulled into a crisis or emergency. The leaders asked to try it say that leader standard work does not make sense, that it is not meaningful to them.

To begin with a metamorphosis of the enterprise you need to fully understand the current state of your enterprise. In other words you need to take a step back, don't try to fix what you perceive as the most pressing issue but try to create a view of the Enterprise to show all your processes and workflows. Current state is plainly an agreed on visual representation for how the organization looks today. It does not define solutions or place blame. It simply is the baseline you will use to define and measure your organization transformation.

The most common contention which commonly arises in enterprise transformation is what I call

climbing the mountain. Intellectual Capital or IC (your employees) in most organizations have no problems identifying and defining all the inefficiencies within their organization. Complications ensue though when they asked how to resolve those issues or how they came to be. Additionally much time is wasted arguing the merits of the issues when you're simply trying to identify your current state. It's even more difficult when the IC are part of the problems which they are trying to identify. No one likes to feel they are a liability to the organization and most IC rarely objectively realize they are. Add on the bureaucracy of pet projects or emotional commitments and it's really no surprise the failure rate of these initiatives are so high (some estimates as high as 90% according to Bill Waddell.

Second, when issues are identified, how do you objectively decide what to work on without adding the complexity of everyones flavor of the day? The flavor of the day consists of what's current in your mind as your biggest issue (which is often the most recent) facing the organization. This is rarely the largest non-value added component which needs the highest priority but is simply the one that pops in to your mind as the most recent (and likely the most important if we are being subjective). A simple example of this is defined in The Goal written by Dr. Eliyahu M. Goldratt, a business consultant whose Theory of Constraints (TOC) explains that anything not a bottleneck should not get initial focus as it will not improve your process capacity. This story though shows how easily the wrong item can be worked on and why it's so hard to identify the bottleneck or largets problem.

While much of what I'm introducing was created in Lean cultures I don't propose calling yourself Lean when you successfully implement these steps (you still have more learning to actually "Be Lean"). Introducing Lean management and information systems requires discipline, time and reflection. Lean principles are even more difficult to embrace, yet they eventually come to influence behavior throughout the enterprise. Values and principles must have time to become internalized within the unique culture of each organization and this is simply a first step. Nonetheless, it is difficult to begin with values and principles alone, because they are intangible. This is where the principles of mind mapping will help (By far the best literature on Lean in IT is Lean IT by Steve Bell and Mike Orzen. This is the most comprehensive book you will find if you're trying to start your lean journey in IT).

Excellent Post on How Not to Build a Kaizen Culture

noreply@blogger.com (Patrick Phillips) — Wed, 19 Feb 2014 10:39:00 -0700

Great post on how to not build a Kaizen culture. This is a great example of how you can't change with a team or group of change agents. In reality it's with a change in culture.

http://timebackmanagement.com/blog/how-not-to-build-a-kaizen-culture-in-three-easy-steps/

How not to build a kaizen culture in three easy steps.

Posted on February 11, 2014 by Dan

Establish some sort of “lean promotion office.”
Create a caste system of colored belts, and staff your organization with them.
Tell everyone that the belted elite will lead their improvement efforts.

This is what’s happening at my wife’s hospital. The “lean team” is responsible for implementing improvement initiatives throughout the hospital. While they’re very, very good at these kaizen activities, they have effectively killed any self-initiated improvement work. Doctors, nurses, and staff passively wait for the lean team to turn its focus to their area, and not surprisingly, the pace of improvement is glacial.

Contrast this situation with Quality Bike Parts (QBP), a distributor of bicycle components and products. The company has not only fervently embraced lean at all levels of the organization, they’ve accomplished the holy grail of embedding lean thinking within the culture. All this while their lean office had precisely one person in it. (It’s now up to a whopping two people.)

Nick Graham, the Director of Continuous Improvement, explains that QBP doesn’t need people in an office to drive lean throughout the company; they need people on the floor who have the skills to do that. So for each project, Nick enlists a few people within the relevant department to lead the effort. Nick serves as a resource for them, but the people in the department do all the work. The result is tremendous growth in individual problem solving skills, the planting of lean thinking into the company culture, and the creation of a deep bench of people who can — and do — pitch in to help other departments with their projects.

Which do you want: the Johnny Appleseed approach, spreading lean seeds that will sprout and bear fruit far and wide throughout the company? Or the Monsanto “terminator seed” approach of Lean Six Sigma Black Belts who parachute in to save the day, but in so doing compromise the learning potential of the company?

Which Will Prevail: Batch Thinking or Worker Leadership?

noreply@blogger.com (Patrick Phillips) — Wed, 5 Feb 2014 11:32:00 -0700

Which Will Prevail: Batch Thinking or Worker Leadership?: For most of two centuries, batch and queue production was the golden key that opened the factory doors of mass production and led many nations to untold wealth. In his first piece for the Post, Fred Stahl tells us why we must discard batch thinking and understand "worker leadership" in order to innovate for the 21st century.

Being Versus Doing, Which Are You?

noreply@blogger.com (Patrick Phillips) — Mon, 6 Jan 2014 21:16:00 -0700

The difference between doing lean and being lean is lean management. The purpose of lean management is to sustain a lean production systems. Without a lean management system, lean production implementations often falter, sometimes fail, and virtually never deliver up to their long-run promises. So, what sustains the lean management system? In a word, it’s you.

As an organization are you doing Lean or are you Lean? This is a simple questions which can easily identify if your organization sees Lean as a strategic cultural shift or as a flavor of the day. Of course it's not just lean but can pertain to any methodology your organization uses (Lean, Agile, SS, Design

Thinking) but for this discussion let's use Lean. I believe the difference between being successful in value based methods and failing is the ability to instill an organization or cultural shift over a program or process shift. In other words any lean process needs lean management to be successful.

Jeff Liker introduces the dilemma perfectly by stating: "Every organization has a set of processes that it uses to provide a material product, information, or a service to customers, and if we can make those processes consistent—that is, reduce variability and shrink the lead time—we can get closer to the ideal of giving our customers what they want, in the amount they want, when they want it. So let’s train some Lean Six Sigma experts to grab the tools and start hacking away at the variability and waste that stretch out lead time; this will make us more successful, both for our customers and for our business. What could be simpler?" Liker, Jeffrey (2011-11-11). The Toyota Way to Lean Leadership

Unfortunately, decades of attempts to do this show that it does not work, at least not in a way that is sustainable for the long term. We measure the process and the results precisely, using Six Sigma, and we develop the optimal solution. We “lean out the process,” shifting to smaller batches, moving steps closer together, and eliminating the bad steps, and the key performance indicators go wild, showing improvements that we had never thought possible. Then comes the bad news. As time passes, the processes seem to turn on themselves and degrade, with variability and waste growing back again. As one Toyota master of lean put it: “It is like pulling the weeds, but leaving the roots.” So what is the solution? Are there sustainability tools? Do we need more Lean Six Sigma black belts and more green belt training? Do we need tougher senior executives setting aggressive goals and holding managers’ feet to the fire to deliver, or else? All of these remedies have been tried, and they have helped for a time, but they still have not produced the sustained excellence that we desire.

A lean organization tends to need to develop organically. It's can be hoped for and it can't be done

overnight. In the book "Toyota Kata" Mike Rother states" At Toyota, improving and managing are one and the same. The improvement kata in Part III is to a considerable degree how Toyota manages its processes and people from day to day. In comparison, non-Toyota companies tend to see managing as a unique and separate activity. Improvement is something extra, added on to managing." Usually when initiatives fail it's because it "takes too long" and management needs "quicker success." Comments such as these indicate the desire for change is tactical and not driven at a fundamental level.

Although management is often the reason for failure in lean cultures it's also on of the largest indicators for success. You do not need a different management system for lean because it is so complex compared to what you have done before. You need it because lean is so different from what you have done before. Many of the habits in your organization, as well as your own, are likely to be incompatible with an effectively functioning lean production environment. You have a conventional mass production management system and culture. You need a lean management system and culture.

In the book "Creating a Lean Culture: Tools to Sustain Lean Conversions", Successful leaders are those who behave in particular ways. In other words, success is based on what you do, not on who you are. That is fortunate, because for most of us, it is too late to be born a leader! Behavior can be learned and unlearned. Included here are how you respond to interruptions in production, the way you arrive at conclusions, and what you ask people to pay attention to. Being a lean organization does not mean doing a couple project with value in mind. Also do not confuse tools and techniques with the indispensable ingredient: you as the chief accountability officer. Without you, no tools, no processes, no books can make your lean implementation a healthy, growing, improving proposition.

Nothing sustains itself, certainly not lean production or lean management. So, act to sustain what you have done by following the processes you have implemented. Again David Mann states in Creating a Lean Culture: Tools to Sustain Lean Conversions:

Use your standard work to establish or stick with a routine for monitoring your processes and the

standard work of others. Remember, standard gives you the most leverage in lean management.

Check the status of visual controls as part of your routine. Insist that those responsible keep them current with accurate and complete entries where reasons are called for. Teach people, over again where necessary, why visual controls are important, where they fit in lean management, and how they drive action for improvement.

Follow up on what you expect in your daily three-tier accountability meetings. Assign tasks to stabilize, diagnose, and improve your area. Follow up on assignments and use visual accountability tools, for example, assignments posted on due dates and coded green for complete, red for overdue. Do not shrink from green/red color coding.

Schedule and stick with regular gemba walks with each subordinate. Stick faithfully to the schedule. Get a feel through asking questions what he or she knows well and what areas need strengthening. Give homework tasks to develop understanding and follow up assignments the next week. Take notes on your gemba walks; expect your students to do likewise. Remember the first purpose of gemba walking is to teach.

Everywhere, ask, “What is the process here?” How could someone tell? Is it working? How is it sustained?” Where necessary, note task assignments and gemba walk topics based on the quality of answers.

Establish an assessment schedule and a plan to phase it in. Share the detailed assessment categories widely. Post results where they can be seen. Expect to see evidence of improvement activities, such as A-3s, daily task assignments, and other process improvement work to address low-performing categories.

Realize you will never be done and take steps to avoid burnout for yourself and others. Organize a regular process for sharing internal best practices so you and your team can recognize the successes you have achieved, even as you gird for work on further

Can a company create an environment in which people are empowered through concrete experiences to develop conviction, trust in a vision, face challenges and come out stronger, and act decisively in response to rapid change? Yes. It largely comes down to creating a culture and then constantly reinforcing consistent practices that enable true leadership to develop. Culture and leadership are two sides of the same coin, and both must be constantly—literally every day—recreated and reinforced through deliberate attention.

Six Sigma Versus Lean Tools

noreply@blogger.com (Patrick Phillips) — Sat, 28 Dec 2013 18:03:00 -0700

Six Sigma Versus Lean Tools

Back for 2014

noreply@blogger.com (Patrick Phillips) — Fri, 27 Dec 2013 09:04:00 -0700

I have taken a bit of time off from my blog duties. I'm happy to announce I have a full slate of material to cover in 2014 and some great topics. You have been very consistent and letting me know it's time for some postings so I look forward to getting some of the ideas I've been working on out to you.

Happy New Year!

Culture is What Happens When No One is Watching

noreply@blogger.com (Patrick Phillips) — Tue, 14 May 2013 21:46:00 -0600

Have you ever heard someone say "Well we need to change the culture to fix that?" All to often when an organization is beginning a Lean transformation the single most important variable which is overlooked is culture. How often do we run across situations where it's assumed a simple tweak to a company's culture is the solution? While that's likely true, how easy is it to change culture? Several weeks back while talking to a peer I heard a great comment which has stuck with me. She said "Culture is what happens when no one is watching." What a profound statement. There is simply no arguing this point. Often organizations will introduce tools and practices to change their workforce to be more "efficient", but this does very little to actually treat the cause or even the symptoms for that matter. The most underestimated changes which are required for Lean Transformation are cultural.

The evidence of the last 20 years indicates that trying to copy or reproduce another company’s tools, techniques, or principles does little to change an organization’s culture, its way of doing things. For example, how do you get people to actually live principles? On the other hand, focusing on developing daily behavior patterns is a leverage point because, as the field of psychology shows us, with practice, behavior patterns are changeable, learnable, and reproducible. Culture change is not achieved through books, intellect, classroom training, discussions, or anything similar. Trying to get each person in an organization to think and act in certain ways means you are working on organization culture.

Consider the cultural makeup of a company. "Culture," does not refer to the "lean culture" to which a company may aspire. Rather, it is the unique traits and characteristics of the people within the organization. Before even tackling an attempt to change your organizational culture you need to ask yourself what you're trying to achieve and how can our culture prohibit our journey? Often the blanket statement of changing culture to achieve an outcome is like tying to slow the spin of the Earth to make your days longer. It's possible but not at all likely. The simple truth is that the best way to change and sustain an organizational culture is by first changing and sustaining management behavior, a lesson many transformation efforts still overlook and consequently fail. Additionally, bureaucratic cultures can smother those who want to respond to shifting conditions. And the lack of leadership leaves no force inside these organizations to break out of the morass. Big egos and arrogant cultures reinforce the what John Kotter calls nine sources of complacency Kotter, John P. (1996-08-07). Leading Change, which, taken together, can keep the urgency rate low even in an organization faced with major challenges and managed by perfectly intelligent and reasonable people. This is what you're likely faced with. It's happening at all levels when no one is watching.

Kotter again explains it best when talking about large scale cultural shifts. "We don’t see these kinds of bold moves more often because people living in overmanaged and underled cultures are generally taught that such actions are not sensible. If those executives have been associated with an organization for a long time, they might also fear that they will be blamed for creating the very problems they spotlight. It is not a coincidence that transformations often start when a new person is placed in a key role, someone who does not have to defend his or her past actions." Kotter, John P. (1996-08-07). Leading Change

Culture is the single most important component in a transformation effort. Again Kotter explains.
"Culture is powerful for three primary reasons:
1. Because individuals are selected and indoctrinated so well.
2. Because the culture exerts itself through the actions of hundreds or thousands of people.
3. Because all of this happens without much conscious intent and thus is difficult to challenge or even discuss. Kotter, John P. (1996-08-07). Leading Change

To get it right understand culture as your largest challenge to implementing lean. Genuine lean is built into an

organization's culture, people, planning, problem-solving - everything its people do, touch, or say. A company can not create genuine lean overnight, and may, in fact, need what I call iterative lean to help get it there. But too much reliance on iterative lean prevents a company from achieving genuine lean.

Changing your culture means changing your knowledge workers’ work norms and work-related values. These norms are established, held, and enforced daily by small social groups that often take their cue from the group’s high-status member what Richard Rumelt in Good Strategy Bad Strategy named "the alpha" Richard Rumelt (2011-07-19). Good Strategy Bad Strategy. In general, to change the group’s norms, the alpha member must be replaced by someone who expresses different norms and values. All this is speeded along if a challenging goal is set. The purpose of the challenge is not performance per se, but building new work habits and routines within the unit.

Development of a lean culture may be put on the back burner for better times, but this is a deadly mistake. If the climate is competitive pressure and recognition of the need to improve, a company should begin with the tools but in parallel, work on changing the culture to sustain and continue the improvements. If a company is in a growing, flourishing industry that is facing little pressure, then it should work specifically on developing the lean culture and apply the tools as a manifestation of the culture.

Roger Conners best explains how to achieve a successful cultural transformation by explaining "Getting people to Buy-In/Invest personally in the culture change process is one of management’s key tasks and greatest challenges. You should expend every effort to get people ready for the change by persuading and convincing them of the merits of the change and by getting them involved in the process. Each step of the enrollment process should be designed to facilitate these two criteria: agreement and involvement. When you do it this way, you simultaneously prepare people for the change and enroll them in the process of the change itself." Connors, Roger; Smith, Tom (2011-01-04). Change the Culture, Change the Game: The Breakthrough Strategy for Energizing Your Organization and Creating Accountability for Results

I don't have all the answers but I do know truly Lean firms with adaptive cultures are awesome competitive machines. They produce superb products and services faster and better. They run circles around bloated bureaucracies. Even when they have far fewer resources and patents or less market share, they compete and win again and again.
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Why the Ivory Tower May Have Authority but is Clueless to What's Really Going On

noreply@blogger.com (Patrick Phillips) — Thu, 21 Mar 2013 21:32:00 -0600

Even though few would dispute the value of being an engaged leader, many still do not practice what they preach. The harsh reality is great numbers of leaders continue to operate in a vacuum by sequestering themselves away in the corner office and attempting to lead from afar. Trust me when I tell you that being out of touch is never a good position to find yourself in as the CEO. I rarely come across leaders who couldn't benefit from being more meaningfully engaged on both a broader and deeper basis, and hope that today’s post will encourage you to do just that and engage.

Patrick Lenioni's new book "The Advantage" is a supreme summary to my point. "Lack of intelligence, domain expertise, or industry knowledge is almost never the problem I see in organizations. In twenty years of consulting to clients in virtually every industry, I have yet to meet a group of leaders who made me think, Wow, these people just don’t know enough about their business to succeed. Really. The vast majority of organizations today have more than enough intelligence, expertise, and knowledge to be successful. What they lack is organizational health.

This point is worth restating. After two decades of working with CEOs and their teams of senior executives, I've become absolutely convinced that the seminal difference between successful companies and mediocre or unsuccessful ones has little, if anything, to do with what they know or how smart they are; it has everything to do with how healthy they are". - Lencioni, Patrick M. (2012-03-14). The Advantage: Why Organizational Health Trumps Everything Else In Business . John Wiley and Sons.

There are hundreds if not thousands of management books which touch the subject and still we fail to improve. This blog will share some of my favorite thinkers on the subject and yet so many people seem lost when trying to solve their dilemmas. We educate hundreds of thousands of professionals in MBA's, management programs and speakers and we still fail often more than we succeed. The solution is presented by exceptionally smart people in many different ways and we still don't see the light. I propose two main reasons for this failure in modern day knowledge transfer.
1. Management believes they know more than the knowledge worker.
2. Because of #1 there's little serious effort to foster and capture intellectual capital and create an environment of learning and sharing.

W. Edwards Deming once observed that, in most companies, a small percentage of employees are clearly superior, a small percentage are incompetent, and the majority of the remaining people will perform as well as the organizational systems and processes allow them to do so. Deming goes on to observe that one of the two primary roles of leadership, then, is to continually cultivate and improve these systems and processes to motivate and incent people to perform at their peak, thereby driving shareholder value. The phrases “if it ain’t broken, don’t fix it” and “if you keep doin’ what you’re doin’, then you’ll keep gettin’ what you’re gettin’ ” are the antithesis of Deming’s continuous improvement model. To drive this point home, some define insanity as doing the same thing over and over again and expecting it to produce different results

Most managers make decisions, solve problems, and take other action believing that they already understand the company's current reality. But they rarely take specific actions to increase their knowledge and understanding of the current reality. In addition, a common understanding of the current reality should be developed, not just an individual one. If this is done right, the rest becomes much easier. Gemba is a concept which can often quickly address this lack of knowledge.

Gemba a Japanese term is defined as a "real place". Think about your firm, where is the value really created? Jim Womack in Gemba Walks states "My purpose in taking a walk is simple: to see and to understand how more value can be created with less waste. But what is the purpose of the value stream along which I’m walking? That is, just what “value” should it provide for its customer? This is a critical question for the lean thinker because diving in to “fix” a process (a value stream) so it can provide more of the wrong “value” can only be an exercise in frustration. Yet I find that many lean practitioners seem hardly aware of the issue." - Womack, James P. (2011-02-21). Gemba Walks Lean Enterprise Institute, Inc..

Another interesting component of business today is the power which accounting has over direction. Consider how often decisions are made based on perceived costs or ratios which have no intellectual value whatsoever. Most management believe cost or accounting based decisions are what drives successful firms.If American business is ever to restore its lost competitive edge, companies must eschew the use of top-down accounting information to control operations. They must empower workers, and managers, to listen to and respond to the voice of the customers they serve and the voice of the processes in which they work.

It will not be enough simply to reform the management accounting information that companies now use to control operations. Restoring competitiveness will require managers altogether to stop controlling business operations with accounting information—even new activity-based varieties of cost management information. Companies first developed the habit of using accounting information to control operating processes—people’s work—only during the 1950s. Before that time, companies did not rely on their accounting systems to provide operational control information. The use of accounting information to control day-to-day operations, almost second nature to managers living today, might have seemed strange to generations of managers before the 1950s.

In Relevance Regained, Thomas Johnson perfectly states. "Companies that give empowered workers and managers ownership of information about customers and processes are not forsaking concern for profit. Far from it! They simply recognize that long-term profitability is impossible if the bottom line continues to dictate people’s actions. Personnel whose actions are driven by the bottom line can not respond flexibly to customers. To motivate behavior that is responsive and flexible, companies require new management information and new management thinking." Johnson, H. Thomas (2008-06-18). Relevance Regained (pp. 16-17). Simon & Schuster, Inc..

If you are a leader your goal needs to be finding good ideas and fostering them. Turf wars and silos need to be a thing of the past of you will join the ranks of many failed companies. John Kotter in Power and Influence noted " 1. Good ideas are rarely lacking inside even poorly performing firms. As a consultant, all I needed to do was go around and interview enough people, summarize the better ideas, and voilà! I would have a first-class report bursting with excellent recommendations. 2. Having a good idea is one thing, implementing it is something else again. The reason firms have excellent ideas in them, and yet still perform poorly, is that the people who have the ideas can’t get them implemented. Bureaucratic and political obstacles stifle their creativity and innovation." - Kotter, John P. (2010-09-28). Power and Influence. Simon & Schuster, Inc..

Change must occur if the traditional top down management is to be removed by bottom up knowledge sharing. Environmental change demands organizational change. Major internal transformation rarely happens unless many people assist. Yet employees generally won’t help, or can’t help, if they feel relatively powerless. Hence the relevance of empowerment. THE RATE OF CHANGE IN THE business world is not going to slow down anytime soon. If anything, competition in most industries will probably speed up over the next few decades. Enterprises everywhere will be presented with even more terrible hazards and wonderful opportunities, driven by the globalization of the economy along with related technological and social trends. The typical twentieth-century organization has not operated well in a rapidly changing environment. Structure, systems, practices, and culture have often been more of a drag on change than a facilitator. If environmental volatility continues to increase, as most people now predict, the standard organization of the twentieth century will likely become a dinosaur.

If you haven't noticed the theme of this blog is to use some of the best practitioners in this field to show you how common the answer is out there. To sum up this topic I close with James Womack's recommendation on how to start your change.

"What is the work of management? What value do managers actually create? My answer, informed by insights from John Shook, is that managers create value—that is, they do useful work—through four types of actions: Gaining agreement on the few important things the organization needs to do. This means focusing on how the organization can dramatically improve its ability to create more value, and the right type of value, with less time, effort, investment, errors, etc.

Gaining agreement is predominantly the work of senior managers, using the lean management tool of strategy deployment. (But please note that the top managers don’t decide in isolation about the few important things. Rather, they gain true agreement through catch-ball dialogue with different levels of the organization about problems and opportunities.)
Deploying the few important initiatives selected by strategy deployment, solving problems as they arise, and evaluating proposals from lower levels of the organization. This is predominantly the work of middle managers, using the lean management tool of A3 analysis that puts plan-do-check-act cycles into an organizational and customer context.
Stabilizing the organization. This means making every step in every process capable, available, adequate, and flexible so the value stream can flow smoothly from end to end and improvements can be sustained. This is predominantly the work of front-line managers, using the lean management tools of standardized work with standardized management and kaizen.
Creating the next generation of lean managers. This is the work—perhaps the most important work—of every manager at every level, using the lean management tool of A3 analysis. New lean managers can only be created in intense dialogue between mentors and problem owners through many cycles of gemba learning.

If this is the work of management, how does my list compare with what managers actually do every day? In my experience, there is hardly any overlap. Most managers I observe spend most of their time with incidental work—box-checking, meetings that reach no actionable conclusions, report writing, personnel reviews that don’t develop personnel, etc. And in the time left over they do rework. By the latter I mean the firefighting to get things back on course as processes malfunction. Most managers seem to believe that this is their “real” work and their highest value to their organization. I see the gap between the true work of management and the things managers actually do as the muda of management, a vast reservoir of wasted effort and lost opportunities that we all need to address. Removing this muda is one of the greatest challenges facing our movement in the years immediately ahead." Womack, James P. (2011-02-21). Gemba Walks . Lean Enterprise Institute, Inc..

Patrick Phillips
http://www.patrickkphillips.info/

Leadership and their Role in Value Delivery

noreply@blogger.com (Patrick Phillips) — Sun, 24 Feb 2013 21:00:00 -0700

The proliferation of process methodologies has not only made the traditional form of managing more uncertain, but has greatly increased the consequences of uncertainty for managers. Value based (Lean) methodologies emerged as a way to manage and even turn these uncertainties into organizational advantages. There are countless ways these methodologies define value, but all methodologies have one commonality which they share to ensure long term success. Leadership and leadership support for value based change initiatives are the number one variable for success or failure of any such initiative. This post will explore how unconventional leadership supports change in your organization and how with thoughtful planning and support you can avoid the most common points of failure.

Traditional command and control structured organizations are often not effectively designed for allowing leaders to adequately promote value delivery. Traditional organizational structures are also not fruitful at turning managers in to effective leaders. Neither are they designed at empowering their workforce, rather they tend to focus on hierarchical decision making which promotes a command and control mentality.

Value or value creation can be viewed in multiple ways. The customer must value your product or service and be willing to pay for it, it must change the product or service, and must be done right the first time. Many frameworks do a great job focusing on these three areas. Although frameworks are great tools at enabling value delivery they can only be utilized if the culture and environment fosters and promote value delivery at every level in the firm, including the individual. Using Pareto’s law we can deduct that tools/frameworks only represent 20% of the ability to deliver optimal customer value while leadership empowerment and support comprises the additional 80%. In successful value focused firms 80% of the effort is expended on changing leaders' practices and behaviors and ultimately their mind set. Senior management has an essential role in establishing conditions that enable the effort to succeed. Their involvement includes establishing governance arrangements that cross divisional boundaries, supporting a thorough, long-term vision of the organization's value-producing processes, and holding everyone accountable for meeting value driven commitments. This is accomplished through regular, direct involvement and understanding their role in empowering their employees (who should be considered your intellectual capital). Without this vision any value driven initiative (Lean, Six sigma, Theory of Constraints, agile) will only be seen as the flavor of the month.

Peter Drucker (http://en.wikipedia.org/wiki/Peter_Drucker) the father of Management predicted then observed a shift in the early 60's which indicated successful firms were putting more decision in the domain of their employees who work with the product. Product complexity and efficiency were creating an environment where production lines where much more complicated and variable and couldn’t be supported by command and control. With the emergence of service based industries it quickly became apparent that traditional management methods were out dated (although this had become equally apparent in manufacturing earlier). Successful organizations today understand the majority of tacit knowledge with tremendous potential resides in the knowledge worker. This is the same worker who under earlier models lacked decision making authority and operated as order takers.

The knowledge workers need to be in control of achieving and promoting change. Therefore, the leader must convey to the worker that they are the ones who own the processes. Leaders need to empower people to have everything in place in order to perform. Only when they know and are empowered what to do will they feel accountable and take ownership of the processes. In organizations with traditional leadership behavior, there are frequently policy deployment directions from senior management. The mindset of these leaders is not to involve the people at all. Therefore, people can’t relate to the KPIs (Key Performance Indicator) that cascade down because they can’t understand their contribution or the relevance of the KPIs. People in these companies can’t engage themselves in supporting their senior management in delivering results. Consequently any initiative which does not empower or utilize the input of the employee is more likely to fail.

Leaders must focus on commitment to endlessly invest in people and promote a culture of continuous improvement. There is no destination for value delivery models, there's only the journey. As a leader you should never consider your “Lean” or “Agile” program as complete. Once you make this mistake you start down the path of contentment and will lose focus on empowering continuous change. If leaders provide a full and continuous investment in their employees then they will in turn see dedication. All too often when talking to senior management about learning and multi-skilling of employees, they tell us they worry about efficiency. Learning take times which reduces what can be delivered to the customer. Therefore, the view is that it is more efficient to have the specialist work on the specialist things (there are times and places for specialists but that’s for another paper). This might make sense from a traditionalist, but from a product-development-as-knowledge-creation perspective, this kind of thinking is plain wrong and even dangerous. Learning is the major value added activity in product development and knowledge transfer. In the long run, reducing learning will only result in loss in market share and a less valuable staff. Often management use the excuse that they have to assign resources to satisfy the customer first, which leaves them little or no time to make real change. Their bosses find it hard to argue the point (or use it as a convenient excuse themselves). Value based culture requires you to make the time to make the change—long-term planning and results versus short-term results with little planning.

Not every leader nor every company culture is ready for this change in leadership mindset. Despite this, many companies have implemented value based tools and techniques for years with tremendous success (Toyota, Boeing, GE) . For example using a lean framework, Center for Ledelse interviewed 400+ companies concluding that only 7% had realized more than 80% of their expectation in their Lean program. This only confirms that these companies need to take action now in adapting Lean leadership behaviour and mindset in to their company culture. Every leader deserves a chance, but remember you will have to fight a lot of scepticism down that road (insert reference). You will likely need to convince the team members by showing them what is in it for them personally. People will change when they realize that their leaders really want to empower them. Leaders need to be consistent in what they ask for. They should not reduce their requirements. They should not change their communication. Consistency it required and we must accept the fact that it takes time sometimes many years for this change to fully reflect in the culture.

Dedication is required of each team member to strive for self-improvement. Commitment is needed for each team member to ensure the values and principles will be followed and the team will hold itself accountable. Courage, because the emotions that empowerment invites, will be unlike anything the employee has ever professionally experienced. Avoid non-dedicated team members or “partial allocation.” A team member who is in multiple teams does not have the same commitment and shared responsibility as the other members. Part-time people equate to part-time commitment. Part-time commitment leads to team failure. To the maximum amount possible, all members are 100 percent allocated—fully dedicated to their team. The amount of management waste that disappears is amazing.

Executing Change in Your Organization. Part 4 on Organizational Change

noreply@blogger.com (Patrick Phillips) — Sat, 9 Feb 2013 21:56:00 -0700

Part four of this blog series on initiating change in the organization through Future State Mind Mapping and the execution of the change. This part consists of the actual change, which most people are patiently waiting for. The secret lies in how you and the project team use the Future State Map to develop this action plan. Remembering that the Future State Map is the blueprint for change is the single focal point for developing a good plan for improvement. Trying to create the perfect plan must not bog down the team. As General George S. Patton so bluntly stated, “A good plan today is better than a perfect plan next week.” The logic behind this statement was simple: It really doesn't matter what you plan, or how perfect you may think the plan is; when the plan is put into action, things will change. Therefore, get a good plan in place and move forward to implementation.

We often don’t see or understand the entire process, which includes the complexity hidden behind the scenes, and the interdependencies with other processes and systems. Cross-functional teams using tools such as value stream mapping thus uncover comprehensive problems, where everyone understands the process. For those reasons we spent a great deal of time preparing to understand the organizational issues and evaluating the value stream. We are now ready to improve value delivery by creating a Future State Value Stream Map (FSVM).

Let me add a caveat to all this work I have defined for you. This is only scratching the surface of continual improvement. That's the point of writing these series. You don't have to know it all to get started. Having a basic should be enough to get going. You likely have enough constraints facing your company that these high level suggestions will get you started. There is much much more to learn though and that's why we call it continuous improvement. The time for strategy is over. Now the process of change can begin. But this does not mean that Value Stream Mapping is complete. Just like all other aspects of continuous improvement, Value Stream Mapping is never finished. As the project work progresses, the team may find that it is necessary to return to the map set and to update and modify both the Future State Map and the action plan.

The future state value stream map is a visual representation of the application of the various Lean tools in the Future State map.

It is created by:

• Arriving at a consensus

• Brainstorming

• Problem solving

• Testing tools for practicality and use

• Resource availability

The future state value stream map will never be implemented all at once. It is meant to be adopted over a time period (i.e., six to eighteen months). The following icons can be used to create the future state value stream map.

Steve Bell in his book Lean IT comments. "Perhaps the highest accomplishment in Lean is to achieve value stream flow. So here are our simple (but not necessarily easy) guidelines for creating Lean IT flow: Position and evolve each value stream toward your competitive sweet spot; maintain a fluid balance between flexibility and efficiency in every process and practice. Stay light on your feet; keep your focus moving in the direction of competitive advantage as the market and your competitors evolve. Strive for simplicity and stability in every process before investing in electronic information systems: apply people, process, and technology—in that order. Listen to your customers often, and proactively manage demand to support just-in-time operations Flow every process where you can. Keep a simple line of sight (physical or virtual) along the entire length of every value stream and supporting process, so they become self-regulating, leveraging the creativity and problem-solving capability of every participant." Bell, Steven C. (2012-01-04). Lean IT: Enabling and Sustaining Your Lean Transformation

We are finally there. We have mapped our value stream. What components on our value stream we want fixed. If this is your first time it's likely that you have a large amount of Non-Value Added activities. Likely it's below 5% of your total value stream. Don't worry this is normal. Most companies run with this VA/NVA ratio. If you are above 5% then likely you have left parts out or you've been working on this for a while and these blog posts are already achievements you have completed. In looking at your value stream look for long wait times. Those long wait times may not be a bottleneck in terms of how much work you can process but can contain a large part of your value stream non-value added activity. Additionally wait times are the easiest to fix because they involve little process redesign or investments needed. For example, if you have weekly meetings to plan work or approve components of your value stream then you're likely adding a minimum of 7 days to your total cycle time. Find a way to reduce meetings to daily standups or eliminate them all together and you've shortened your cycle time by 7 days (Just think if one day's inventory is worth $10,000 then you have eliminated $70,000 of inventory just by eliminating a meeting).

Along with the list of items you will be working it's a good idea to prioritize the items to prohibit boiling the ocean. "Mapping the Total Value Stream: A Comprehensive Guide for Production and Transactional Processes" by Mark Nash has a great list which I would recommend for prioritization.

Are fast and easy to complete
Are most visible to the workforce (to demonstrate the power of continuous improvement)
Address the biggest problem to the customer
Address the biggest problem to the supplier
Address the biggest problem to employees within the value stream
Address customer satisfaction issues
Effect biggest ROI
Effect fastest ROI
Facilitate employees' acceptance of change (fastest buy-in)
Pertain to the toughest employees to convince

Regardless of the continuous improvement methodology employed by the organization, Value Stream Mapping lends itself well to the concept of kaizen. Although kaizen is literally translated from Japanese as “good change,” it is more appropriately defined as “rapid, good, continual change.” This concept, which is used in a cultural fashion with many Japanese companies, empowers the work force to immediately stop a functioning value stream at any time when a problem is encountered. All persons required to identify the root cause and a solution are gathered, and the issue is resolved as quickly as possible. Use your whole team to determine what activities or wait times on the value stream you will work on. Involve as many people as you can in the process. I'm not suggesting the solution needs to be by consensus but it does go a long way to get as much input from your intellectual capital (employees) as possible. After all they know the problems all too well because they live in them daily.

Once the fundamentals of the current value stream map and the future map have been addressed, there is a strong need to ensure that the implementation of improvements is carried out in a structured and methodical fashion. Without someone driving forward the improvements, they are unlikely to happen and the improvements to performance will be negligible. Similar to how you created your mind maps and value stream maps have someone who's watching the value stream and looking for opportunities. This doesn't mean they are in charge of the value stream. That role is for everyone within the value stream. Everyone in charge of improving the value stream is also responsible for it.

In order to keep track of your progress a lean improvement chart is one method I prefer. A Lean improvement chart lists each Lean concept that the project team wants to introduce and sustain within the value stream. Each concept is shown with a section devoted to training, implementation, and sustainability. The overall success, as well as that of each component, is measured as “percent complete” on the chart, allowing for the team and the employees in the area to see their progress.

Finally, as progress is observed, the results should be conveyed to management in a format that allows for financial impact to be understood. Because any change that is implemented should ultimately result in improvement to the bottom line, it is critical that metrics provide data to support and substantiate the change. However, when dealing with the financial impact, it may be necessary for accountants and financial analysts to rethink the traditional ways of financial reporting. Implementing change at a fast pace may create a situation where traditional financial reports are misleading. The executive council must understand these potential situations and be prepared to have the financial staff of the organization retrained to think differently and also to strongly support the mapping and project team.

Your success will come from accepting change. Winning comes from a culture that embraces change and pursues perfection. Setting lofty goals, empowering employees to do the things necessary to accomplish those goals, and accepting the rough spots along the road are the things that set great organizations apart. Success comes from understanding that the road to perfection is a journey of continuous improvement. Making change in small pieces, at a pace in the beginning that is acceptable to both employees and management, is how change starts. As the culture comes to accept change, the speed and amount of change will grow as well. By starting with those things that are easy to change, and by working with the employees accepting or wanting change, success will come.

But you must remember: this is only the beginning. Value Stream Mapping is not a “one and done” tool used at the beginning of the journey, never to be repeated. Value Stream Mapping, just like so many other continuous improvement tools, is to be used from now on. If you quit, it's not continuous improvement. Do not believe those who say: “We've achieved the future state. We're done.” You are never done. When the team, management, or employees within the value stream begin to realize they are close to the Future State Map, it is time to remap. This is the time to remap the Current State Map and create a new vision of the future.

Creating a More Cohesive Lean IT Community

noreply@blogger.com (Patrick Phillips) — Tue, 5 Feb 2013 22:39:00 -0700

In 2013 I really want the Lean IT community to become more visible. Along with this visibility there needs to be a better method for sharing best practices and personal stories. Please join the following pages with me and share as much as you can.

http://www.reddit.com/r/LeanIT/

https://www.facebook.com/pages/Lean-It

Your Budgets For Next Year Are Likely Now Complete, Now See How it's Ruining Your Value Delivery.

noreply@blogger.com (Patrick Phillips) — Wed, 19 Dec 2012 10:15:00 -0700

Everyone has to deal with budgeting. Budgeting is simply the process of determining how to fund your expected needs in a project. Budgeting is not a process with an extensively long history. Much like most modern management it is a function of how organizations with tremendous growth planned spending. They determine how people behave in any given situation. Focusing leaders' minds on the stewardship of shareholders' funds and ensuring that managers worried about controlling costs were its original functions, and leaders and managers, by and large, behaved accordingly. But budgets have since been hijacked by a generation of financial engineers that have used them as remote control devices to "manage by the numbers." They have turned budgets into fixed performance contracts that force managers at all levels to commit to delivering specified financial outcomes, even though many of the variables underpinning those outcomes are beyond their control. This leads to undesirable and, in many cases, unethical behavior.

How has budgeting and the finance process stiffed innovation to the extent where over 90% of professionals look at budgets in negative terms. Why is there not more outrage regarding how the process denies agility? Lean and agile models work towards delivering value while adapting to changing business needs. I believe there is nothing more threatening to an agile and lean process then the limitations set forth with a budgeting process. When budgets are calculated to forecast something a year to six months out how can this possibly foster value creation? Budgets are a modern day contract where the budget contract is usually fixed for a period of twelve months. Its purpose is to commit a subordinate or team to achieving an agreed-upon outcome and then to enable a superior to control the results against that outcome (reserving the right to interfere and change the terms if necessary).

How have we arrived at such high levels of dissatisfaction with budgeting? There are three primary factors: (1) Budgeting is cumbersome and too expensive, (2) budgeting is out of kilter with the competitive environment and no longer meets the needs of either executives or operating managers, and (3) the extent of "gaming the numbers" has risen to unacceptable levels. Few senior executives seem to be aware of these problems. They see outcomes in terms of numbers rather than behaviors. In this context, budget contracts can act like drugs. They seduce executives into believing that they have control over their future financial outcomes. But, like most drugs, they have serious side effects. They lead both senior executives and operating managers into an annual performance trap from which it is difficult to escape.

In these turbulent times the budgeting process struggled to cope. Goals and measures were internally focused. Intellectual capital was outside the orbit of the budgetary control system. Innovation was stifled by rigid adherence to fixed plans and resource allocations agreed to twelve to eighteen months earlier. Costs were fiercely protected by departmental managers who saw them as budget entitlements rather than scarce resources. The internal focus on maximizing volume collided with the external focus on satisfying customers' needs. And far from being empowered to respond to strategic change, front-line people found that it was easier to do nothing than to try to get multiple signatures on a document authorizing a change in the plan.

The organizations I have worked with used to set targets on the basis of financial numbers that, more often than not, were negotiated between superiors and subordinates before the start of the year. These numbers were fixed for the year ahead and represented the key component of the annual fixed performance contract. All actions were then focused on meeting the numbers not on value delivery. However, whether this process maximized the profit potential is doubtful given the desire for superiors to stretch ambition and the desire for budget holders to play safe.

What does the Lean Technology Transformation do to solve this? Well it's not so simple but here are some ideas. What holds your organization together is not a plan, but a commitment to a clear purpose and to a set of clearly articulated principles and values. To create value intellectual capital needs to be set free from stifling bureaucracies, free from the restrictions of predetermined plans, free from the fear of failing to meet fixed targets, and free from the forced cross-company actions designed by central planners. Agile leaders set targets based on high-level key performance indicators (KPIs) such as return-on-capital, free cash flows, or cost-to-income ratios. Goals are typically set at levels aimed at maximizing short- and medium-term profit potential at every level of the business. Managers are willing to accept (or propose) these stretch goals because their performance will not be evaluated and rewarded against them. They will subsequently be measured and rewarded using a range of relative indicators such as peer group performance, internal and external benchmarks, and prior years' results. "Baseline" goals set a lower reference level of expectations. Though goals are primarily financial at the highest level, they become more operational the nearer they are to the source of value delivery.

By making this transition The benefits are that the process of setting targets is fast (days rather than months) and because it is based on relative measures it will seldom need to be reset. Also, because the benchmarking bar is always being raised, it is more likely to maximize profit potential. Some project leaders figure they have saved 95 percent of the time that used to be spent on budgeting and forecasting. This time is more usefully spent on planning how to create more value for customers and shareholders as well as how to respond more effectively to change.

Changing to a more updated model fundamental matches the goals of a lean organization. The impact on the behavior of front-line people must not be underestimated. It leads to what Harvard professor Chris Argyris calls "internal commitment." The hidden problem, according to Argyris, is that people have to deal with two types of commitment. First, there is external commitment, which, by and large, leads people to fulfill contractual obligations specified by others, and in which performance goals are top down. Second, there is internal commitment, which allows individuals to define their own plans and the tasks required to fulfill them, and which is participatory, comes from within the individual, and leads to people taking risks and accepting responsibility for their actions.This is the behavior that the relative improvement contract seeks to encourage. The rhetoric of leaders does not produce internal commitment any more than it leads to effective empowerment or personal responsibility. Such changes require a fundamental change in the process that determines the behavioral context.

Finally, what needs to happen in the firm is a decentralization which enables leaders in your high performance teams. Below are six common principles which organizations who have made this break posses:

1. Built a governance framework based on clear principles and boundaries
2. Created a high-performance climate based on the visibility of relative success at every level
3. Provided front-line teams with the freedom to make decisions that are consistent with governance principles and strategic goals
4. Placed the responsibility for value creating decisions on teams
5. Focused teams on customer outcomes
6. Supported open and ethical information systems

The leaders in question have abandoned the notion that employees base their commitment on mission statements and detailed plans prepared by someone else. They have abandoned the command, compliance, and control approach that assumes that strategy formulation and execution take place in separate compartments. And they have abandoned the assumption that front-line managers cannot be trusted with the responsibility to think and act on the latest information in the best interests of the firm as a whole. They have built a relative improvement contract based on mutual trust, with clear responsibilities for high-level performance from front-line people. They have also built a community spirit that reflects the interdependence of the organization and that supports seamless solutions for customers. Above all, they have recognized that people respond more positively to clear values and principles than to nebulous mission statements and detailed plans.

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