You can do low cost iteration anywhere.

Go to the gemba. Go and see. Stand in a circle and observe what's happening with your own eyes. The planners of The Porch in Philadelphia did this in spades for an analysis of how customers were using the new public open space area in front of Philly's 30th Street Station. The data they gathered from simple observation has enabled them to modify and iterate the layout of the space to better serve the community.

University City Design, the organization responsible for creating the open space, wanted to go light, flexible (and cheap) shortly after starting the project, and then study what happened next.

"In the office, we started looking at pictures of Bryant Park, of Rittenhouse Square, and fantasizing about what [this] could be," says Prema Gupta, the director of planning and economic development for UCD, recalling the earlier stages of the whole project. "It's almost like there was a fork in the road. We could have built out that vision at that point, and we would still be fundraising for it, and it would still be a blank stretch of sidewalk."

So they learned that a farmer's market doesn't quite work in The Porch, but a food truck rally does. Bistro chairs are nice, but Luxembourg chairs are better. After all, If you can only afford some lighter interventions, you can at least ensure they serve exactly how people move through and use public space.

UCD's approach is just another example of PDSA skillfully deployed to improve quality and reduce costs. Call it "trystorming," call it 3P, call it MVP, call it "design thinking," call it whatever you want. The important point is that improvements don't -- and shouldn't -- require massive investments in time, money, and resources until you know for sure that the improvement is going to work.

Check out this story, the cool graphs, and analysis at the Atlantic Cities website.

Go and See

We often think about the principle of "go and see" applying to giant companies, where leadership and management is far removed from the front lines. But it applies to small companies, too -- as small as a single coffeehouse. In a NYTimes story about small business mentors, a coffee shop owner explains that It’s usually easier to find new savings than to lure new customers. I don't know anything about running a coffee shop, but I do know a great example of "go and see" when I read it:

“When I had three shops, I was paying a huge amount in garbage bags,” [Mr. Goodall] recalled. “It was $35 for a package of 100” — and he was going through four packages a week. “I thought, ‘How are we going through more than 50 bags a day?’ So I spent the day sitting here, watching. The first thing I noticed was, we were using the most heavy-duty, contractor-grade, carry-a-small-water-buffalo-grade bag. The second thing I noticed was, my baristas were double-bagging.”

Mr. Goodall’s manager explained that the old bags ripped when the baristas dragged them to the Dumpster. So Mr. Goodall instituted a no-dragging policy. To lighten the load and to avoid dragging, he said employees could change bags more often but had to use medium-grade bags only. The stores immediately went from four packages a week at $35 apiece to two packages at $25 — money that dropped directly to the bottom line.

Sure, you could carp about Mr. Goodall instituting a policy rather than having the staff come up with it. And perhaps he could have used some sort of wheeled cart to make the transportation easier. Who knows? We're not there to go and see.

But I do know that first-hand observation is an amazingly powerful tool, no matter the size of the organization. As Mr. Goodall says,

“I could pay myself $4,000 more a year because of that one decision.”

A sheep in sheep's clothing

In working with a client this week, I learned that there can be serious cultural obstacles to embracing structured problem solving (what I'll call "A3 thinking" in this post -- sorry, Jon Miller). A worker at one of my clients recently confessed that she was anxious about talking to colleagues in other departments about her A3. She needed to get background information about how this problem was affecting other areas of the company in terms of cost overruns, rework, etc., but she was afraid that her coworkers would be suspicious of her questions. Even though the company doesn't have the entrenched fiefdoms of a giant 10,000 person firm (it's only about 150 people), there's still a deep-seated wariness of someone from another functional silo poking around. She was also worried that her colleagues would see her questions -- and her A3 -- as merely a cover for her ulterior motive: a justification for her pre-determined and preferred solution.

Creating and sustaining a culture committed to learning and continuous improvement ain't easy -- if it were, we wouldn't still be talking about Toyota. (And I'm looking forward to reading Jon Miller's new book, Creating a Kaizen Culture.) But it seems to me that one critical step is in the process is to undertake A3 thinking with a true spirit of open inquiry.

You can't go into an A3 with a pre-determined solution. The A3 is a vehicle to structure your learning process and help you communicate your learning effectively. It's a visible way to guide your PDSA cycles. It's not a sales technique (although it does ultimately help sell your solution), and it's not a magician's misdirection. To use it in these ways is to breed cynicism, suspicion, and resistance.

An A3 is not a wolf in sheep's clothing. It's just a sheep.

September 2013 Newsletter: Technology Isn't the Answer

When confronted by an operational problem, we often jump to the conclusion that technology must be the solution. But more often than not, we don’t really understand the problem, and technology serves only to make a broken process a little bit faster. Take time to grasp the situation first. Once you really understand the problem, you’ll be able to find a cheaper and more effective solution that’s faster to implement. Download PDF to read the full article

Lean: it's just like backpacking.

As you may know, I've been spending a lot of time working with outdoor companies. My background is in sporting goods & the outdoor industry, and I'm an avid backpacker myself. Recently, I've noticed that building a lean organization focused on continuous improvement has many similarities with the backpacking ethos. 1. Multi-purpose is better than single purpose.  When you backpack, every ounce and every cubic inch is critical, so you look for gear that serves multiple purposes: zip-off pants (long pants and shorts); CamelBak's All Clear purifier (water purifier and bottle); backpacks with tops that convert to fanny packs for day hiking.  When you design a business process, you want to have people who can fulfill multiple functions: customer service agents who can take orders but also work in warrantee; marketing staff who can help with packaging; product developers and designers who can cross the aisle. This flexibility creates greater understanding, improves handoffs, and allows you to flex the workforce to meet sudden demand shifts.

2. A place for everything, and everything in its place. The lean principle of "5S" (essentially, everything neat, clean, and organized in its proper place, with no unneeded items) is critical in backpacking. You can't carry extra gear that you won't use; making and breaking camp is far easier when everything is in its proper place; and cleaning everything before going out is a great way of spotting problems or defects. The same rule holds true on a manufacturing floor or in an office: critical documents should be visible and easily accessible; you can work faster and with fewer errors when you have only the correct and needed information at hand; and you can spot problems or time-sensitive issues when they're segregated appropriately.

3. Flow When you're backpacking, you become acutely aware of issues that impede the smooth flow of camping life. How far away, and how do you get to, the water source? Where will you set up your kitchen? What's the process by which you'll set up your tent? Where will you hang your food? Of course, it's possible to make anything work, but when you're pressed for time, you want all activities to proceed as smoothly as possible. You want them to flow with a minimum of fuss, of rework, of back-and-forth trips to your backpack or your campsite. Similarly, when you're designing an office layout or designing a process, you want to think through the process to ensure that there are as few handoffs as possible, and that there's a minimum of travel time between groups. It's not catastrophic if the credit department has to walk 250 feet to the sales team -- but it's not ideal.

I'll discuss other similarities in a future post. In the meantime, what similarities do you see?

Why lean is a magic trick.

My friend Roger is the head of continuous improvement at a major hospital system in Florida. He's also an amateur magician. Shortly after started working at this hospital, he and his team made some significant improvements -- among other successes, they managed to avoid spending many thousands of dollars on unnecessary ventilators, they solved the (seemingly) intractable problem of missing wheelchairs, and they cut down on expired medications. When I would compliment Roger on these wins, he would always say, "Nah, those are just magic tricks. They're not important."

And I would nod sagely over a beer and agree with him, without really understanding what the hell he was talking about.

But I finally realized what he was getting at. The quantifiable successes like lower costs are the carefully planned misdirections that the magician uses to keep our focus away from what he's really doing. "Pay attention to the shiny coin; don't look at what my other hand is doing."

The quantifiable wins are the misdirection that keep senior leadership happy. The CEO can calculate the ROI on the process improvement group and feel good about supporting it.

But for Roger, the real magic isn't those successes, no matter how impressive. Rather, the magic is the development of people's problem solving abilities. It's the creation of a culture driven to improve. It's getting doctors, nurses, and administrators -- getting all employees, in any organization -- deeply engaged and passionate about lean.

Doing stupid work faster is still stupid.

I was teaching a class at Stanford recently on process improvement. One of the students explained how much time he spends collecting, organizing, formatting, and distributing reports from other engineers in the organization for delivery to the senior management. We talked about a variety of ways that standard work, checklists, and templates could streamline this task, making it faster and easier. So far, so good.

Then we drew a value stream map and realized that although we could make his work more efficient, he was adding absolutely zero value. His work was 100% waste. All the value came from the information provided by the engineers in the field.

So we eliminated Rajiv's work entirely. He worked with IT to create a webpage for the engineers and provided them the template and format for the weekly and monthly reports. The engineers entered the information directly,  senior management downloaded and read the reports at their leisure -- and Rajiv had more time to do real work.

It was a good lesson for Rajiv that optimizing waste doesn't change the fact that it's still waste. And it was a good reminder for me that anytime you see repackaging, reformatting, or reorganizing of data, you're almost certainly looking at waste. Why not get the information entered correctly the first time?

August 2013 Newsletter: Grasp the Situation

Faithfully following PDSA increases the likelihood that your countermeasures actually work and improve the situation. However, before you can embark on a PDSA cycle and create an A3, you must first get a firm understanding of the current conditions. Thoroughly grasping the situation is essential to effective problem solving. Download PDF to read the full article

How to make lean ideas spread more quickly.

In his latest article in the New Yorker (Slow Ideas: Some innovations spread fast. How do you speed the ones that don’t?), Atul Gawande argues that there are ways to increase the speed at which new ideas spread. I think there are powerful lessons for lean leaders in his analysis. Gawande relays the dramatic differences in the adoption rates of anesthesia and antisepsis in medicine. In October 1846, the first patient was anesthetized in a US hospital for the excision of a tumor. Within eight months, anesthesia was being used all over the world, and within seven years virtually every hospital in the US and Britain had adopted it. By contrast, Joseph Lister first published a series of reports in 1867 about the benefits of antisepsis, but it was over twenty years before sterile procedures and practices became the norm. As Gawande describes it,

two decades [after Lister's reports], hand washing was still perfunctory. Surgeons soaked their instruments in carbolic acid, but they continued to operate in black frock coats stiffened with the blood and viscera of previous operations—the badge of a busy practice. Instead of using fresh gauze as sponges, they reused sea sponges without sterilizing them. It was a generation before Lister’s recommendations became routine and the next steps were taken toward the modern standard of asepsis—that is, entirely excluding germs from the surgical field, using heat-sterilized instruments and surgical teams clad in sterile gowns and gloves.

Gawande goes on to argue that there were two key differences that caused anesthesia to be adopted more quickly than antisepsis:

First, one combatted a visible and immediate problem (pain); the other combatted an invisible problem (germs) whose effects wouldn’t be manifest until well after the operation. Second, although both made life better for patients, only one made life better for doctors. Anesthesia changed surgery from a brutal, time-pressured assault on a shrieking patient to a quiet, considered procedure. Listerism, by contrast, required the operator to work in a shower of carbolic acid. Even low dilutions burned the surgeons’ hands. You can imagine why Lister’s crusade might have been a tough sell. This has been the pattern of many important but stalled ideas. They attack problems that are big but, to most people, invisible; and making them work can be tedious, if not outright painful.

How about the spread of lean ideas through an organization? It seems to me that we face similar challenges. Most organizations have adapted over time to the inefficiencies and problems that their processes create. People are so used to the problems -- product defects, mis-shipped orders, overworked staff, long lead times -- that they no longer question whether or not those issues can be improved. They're just taken for granted as the way things operate. The problems have, in essence, become invisible -- like germs.

Moreover, embracing lean necessitates adopting new approaches to work -- single piece flow, visual management, etc. These new approaches are neither comfortable nor easy for leadership or front-line staff. Yes, lean makes life better for customers (higher quality, lower costs, faster delivery), but in the short term, it doesn't make life any better for workers.

So how do you get ideas to spread more rapidly? Gawande suggests that:

1. You have to understand existing norms and barriers to change to really grasp what’s getting in their way.
2. You need “seven touches” -- that is, you need to talk to people at least seven times. You can't rely on evidence, no matter how powerful.
3. You need to have just a few key, easy to remember messages about the new ideas.

Gawande explains that

“Diffusion is essentially a social process through which people talking to people spread an innovation,” wrote Everett Rogers, the great scholar of how new ideas are communicated and spread. Mass media can introduce a new idea to people. But, Rogers showed, people follow the lead of other people they know and trust when they decide whether to take it up. Every change requires effort, and the decision to make that effort is a social process.

The lesson of this article is that a training program, or a lean promotion office, or a couple of workshops will not be sufficient to spread the change throughout your organization. No matter how logical the changes and no matter how apparent the benefits, you won't be able to spread lean without consistent, one-to-one mentoring.

For another view on this article and its applicability to lean, read Mark Graban's post at the LeanBlog.

Protons vs. Electrons

It's (relatively) easy to see waste on a production line. When you're dealing with physical things, you're dealing with protons. You can actually touch the defective products and measure the inventory pileup. When you're trafficking in information, you're dealing with electrons. It takes tremendous effort to see and measure the waste in an office process, because most of it resides in files stored on your computer and in your inbox.

My friend Karen Martin stresses to her clients the need to measure completeness and accuracy (%C&A) in their office processes. A process that is 100% C&A means that there are no errors. But it also means that there is no missing information. No misleading information. No ambiguity. No need to ask the upstream person any questions at all. 100% C&A means that when you get the file or the email, you know exactly what to do, how to do it, and when it's due by.

Think about that for a second. It sounds simple, but it's not. Total clarity in communication is a pretty damned high bar to jump over. In fact, our communications are generally so riddled with ambiguity and errors that we don't even recognize them. We just accept them as the normal course of business.

They're not. And just because electrons are smaller, lighter, and less expensive than protons doesn't make wasting them any more acceptable.

July 2013 Newsletter: Leveling the Load.

Sudden spikes in demand—which translates to workload for you and your employees—are toxic to people and processes. That’s why great companies “level the load” -- the workload, that is. They actively smooth out the volume of work to avoid having employees struggle like overloaded pack mules. . . . Download PDF to read the full article

"We are problem solvers"

NPR's story on how three American brush manufacturers are successfully competing with Chinese competition was a dose of reality for those who complain that they can't win against low-cost, low-wage countries. These three companies adopted the following strategies to thrive:

1. Compete on quality, not price. Professional painters don't want brushes whose bristles come off in the paint, which is what you get with low-cost Chinese brushes.
2. Adapt to customer's needs and serve niche markets. One company makes a $40,000 brush used to keep pigeons out of the top of the Freedom Tower in NY, and a tiny brush for NASA's Mars Rover.
3. Nurture strong, personal, relationships with customers. The owners of these companies have been in business for over 40 years, and they're always available by phone to their long-time customers.

But here's my favorite part of the story: the plant manager at one of the companies, Adam Czarnowski, who has been with the company for 63 years (sixty-three years!), says:

We are not ordinary brush makers. We are problem solvers.

Think about the pride, sense of ownership, and engagement for that kind of attitude to exist. Do your employees see themselves as cogs in the corporate machine, or as problem solvers?

(You can read a longer version of this story in the NYTimes magazine.)

You Call That Leadership? (Part II)

In last week's blog post, I took Strategy+Business to task for suggesting that a leader ought to make three major decisions within the first ten days. I think that's a lousy way to lead and is fundamentally disrespectful to the people who work in the organization. So I was gratified to read this week's NYTimes Corner Office column with Bill McDermott of  SAP. Apparently, Bill also believes that asking questions and showing respect for employees is much more important than acting quickly to impress people:

I moved up to become the sales operations manager for the New York region [of Xerox], then became the district manager for Puerto Rico and the Virgin Islands. Our region was ranked 86th in the company out of 86....

So now the challenge was, how are you going to make these guys winners? I spent two weeks interviewing everybody and listening. I’d sit there and just say, “What do you think we need to do?”

This attitude is exactly what's meant by the lean precept of "go and see." And the result?

After doing that for two weeks, I found out the three things that were unanimous in terms of what people thought we should do. No. 1, they wanted to be motivated. A previous boss, they told me, had been very financial in his orientation, and focused on cutting expenses. The second thing was that they wanted to have a holiday party, because they had lost the holiday party. The third thing is that they needed clear direction on what they were supposed to do. “Just tell us what to do,” they said.

So we basically gave them three things that we were going to focus on in the business. Then we gave them inspiration and pageantry at every turn to celebrate the victories as we made progress against those three goals. And then we had the holiday party, which was the most important of all. By the end of the year, we ranked No. 1 in terms of beating our plan.

Now, some of these things might seem trivial. I have a Stanford MBA, and I'm pretty sure that we never had a class that taught the significance of a holiday party. I can almost guarantee that if Bill hadn't talked with everyone face-to-face right up front, he wouldn't have understood its importance, and he would have missed the opportunity to make a real improvement in morale and employee engagement.

Go and see. Ask questions. Show respect. You might be surprised at what you learn.

You call that leadership?

Booz & Co’s recent article on strategy and leadership misses the point of, well, real leadership. What You Should Accomplish in Your First 10 Days argues that in our “exponentially faster” business world new CEOs must take meaningful action in their first 10 days on the job. Only through rapid, dramatic action can a new leader reinvigorate a struggling company. Nonsense.

The author proposes that the ten-day plan should involve

three significant decisions. Granted, three is an arbitrary number but it is one that will allow the incoming CEO to demonstrate knowledge of the business, surety of direction, and bias for action—without coming across as reckless. These decisions could include a declaration of general strategic direction, moves among senior personnel, or the launch of a new initiative. . . . The goal is to blast through legacy roadblocks, set the organization in a firm direction, and energize activity from top to bottom.

This proposal surely feeds into the egos of those CEOs who want to put their personal brand on the organization, but I doubt that the employees would respect anyone who makes dramatic changes so quickly, before they really know the company.

“Go and see” is one of the core principles of lean thinking. You can’t make good decisions if you don’t understand a situation deeply, and you can’t understand a situation deeply without actually seeing first-hand what the reality is. “Go and see” is also a fundamental way to demonstrate respect for people. Making sweeping changes that effect hundreds or thousands of people in the first ten days—without having a deep understanding—is fundamentally disrespectful.

In rare cases—say, Steve Jobs on his return to Apple—that kind of fast action might be appropriate, but it’s hard to think of any other successful leadership change that involved major changes in the first ten days. Allan Mulally at Ford? Sam Palmisano at IBM? Anne Mulcahy at Xerox? No, no, and no. If you want action that fast, you’re more likely to end up with “Chainsaw” Al Dunlap than with Andy Grove.

Real leadership requires listening and understanding. And that takes longer than ten days.

June 2013 Newsletter: Standard operating procedures are not handcuffs.

Many people view standard operating procedures—or standard work, in the Lean lexicon—as shackles, constraining flexibility, creativity, and innovation. They’re wrong. Download PDF to read more

Eliminating "TIMWOOD" for Success

I have the pleasure today of featuring a guest post from Tony Ferraro of Creative Safety Supply. Tony has an excellent understanding of lean, and I thought he would do a good job explaining how the elimination of waste can be beneficial to a sporting goods retailer. *                         *                        *                      *                        *                           *

Most businesses are constantly on the lookout for new and innovative ways to increase sales, enhance customer satisfaction, and streamline business practices for better efficiency. One tactic that is growing in popularity is the focus on waste elimination through "TIMWOOD."

For those of you who are unfamiliar with this expression, TIMWOOD is an acronym that outlines the seven most common wastes in business. The seven wastes are: Transport, Inventory, Motion, Waiting, Over processing, Overproduction, and Defects. If you're a sporting goods retailer, here's how focusing on just two of these areas can improve your business.

T: Transport Every time an item is moved it runs the risk of being lost or damaged, thus losing value. Most retailers inevitably transport items multiples times into and around the store: there's the initial unloading of the goods off the truck and into the storeroom or warehouse.  There's putting the goods onto the floor or the shop window. There's the transport involved in refreshing the window or floor display, to say nothing of the daily cleanup and maintenance of the store fixtures. Each time store staff touches and moves the product, there's a chance for damage, which inevitably lead to markdowns.

O: Overproduction Overproduction is commonly referred to as one of the largest wastes in the business world. In the case of a retailer, overproduction is actually the over-purchasing of inventory, which leads to items sitting on shelves, tying up financial resources and physical space. Obviously, it's impossible to forecast consumer demand perfectly, particularly when you're ordering 6-9 months ahead of the actual delivery date to take advantage of early order discounts. Consequently, it's essential to have a strategic plan for balancing your pre-season orders with your fill-in orders. Too many retailers gorge themselves on products with special discounts without factoring in the true cost of the inevitable markdowns.

Take a Closer Look In future posts I'll address the other types of waste in "TIMWOOD." In the meantime, it may be beneficial to take a closer look at the amount of unnecessary transport and overproduction/purchasing that might be costing you money. Just by implementing a few simple steps, you could take your sporting goods store from mediocre to magnificent.

How can you bring standard work to communication?

I'm back from the annual Shingo Conference, where my book, A Factory of One, received a Shingo Research Award. A common topic of conversation at the meeting was the importance of standard work in an organization. Seems that whether you're talking about the factory floor or "carpetland" (the office), companies aren't reaping nearly as much benefit from standard work as they could. The R&D engineers at one of my clients have done some interesting work in this area. They're inundated with email (like most people), and they're obligated to check messages as they come in because there might be something urgent. Of course, most messages aren't urgent at all, but the possibility -- and the anxiety -- exists that they might miss something critical, like a major product quality problem.

Their situation is hardly unique, of course. But unlike most groups who simply wave their hands feebly and bemoan their fate, they've deployed standard work to fix the problem. They created a new, standard communication protocol:

Pay attention to the critical benefit here: everyone has agreed that email is NOT to be used for urgent or complex issues. This agreement really is significant, because it unshackles people from their BlackBerries during meetings, or product development work, or strategic planning. Or their kids' soccer games. Or dinner. Or sex. Which means that there's now a fighting chance to have some uninterrupted time to, you know, think.

This protocol isn't a breakthrough along the lines of, say, cold fusion. (Or duct tape. Or Oreos, for that matter.) However, the clear expectations and standards around the use of communication tools give the engineers license to ignore the beep of their smartphones and focus on real value-creating activities.

This exact protocol might not work for you. You might want to account for text messages, or IM, or even old-school memos. Every company has an idiosyncratic culture and needs. The important thing isn't how you define your communication protocol, but that you define it.

Give it a try, and let me know how it works out.

Size matters. Not.

I brought my Prius to the Toyota dealership today for a regular check-up and a recall repair (some pin thingamajiggy in the steering column). I said to the service guy that Toyota sure seems to have a lot of recalls these days -- four in the past three years for my car. He said,

"Sometimes it's tough to keep track of all the little things when you're the world's largest car company."

Okay, he was proud of Toyota's growth, but really, that was a disappointing response.

Consumers don't care if you're the largest car company, heart transplant clinic, or high-cholesterol salty snack food producer. They only care that you're the best. Period.

Much of my work is done in the outdoor industry, where products are, by and large, guaranteed for life. No one will buy a tent or a carabiner that isn't backed by the full confidence and credibility of the company. No consumer will buy a tent because it comes from the largest tent maker; that's totally irrelevant when you're hunkered down in a hail storm in the Wind River Range, or anchored to the side of El Cap. The only thing that matters is the value and the quality of the product.

Size doesn't matter. If you can't keep track of "all the little things," you won't be the largest company in your industry for long.

Focusing on quality and value will get you size. Focusing on size will get you trouble.

May 2013 Newsletter: How to Make Your Work Flow

If you’re a supervisor, a manager, or an executive, your days and weeks probably seem impossibly hectic, filled with an unending series of fires that you have to put out. There’s so much variation in your daily job that it probably seems impossible to create a smooth flow of customer value—and that’s stressful and exhausting. Nevertheless, you can create some semblance of flow in white-collar work. . . . Download PDF to read more

A Factory of One receives the Shingo Research Award!

I'm at the Shingo Conference this week to receive a Shingo Research Award for my book, A Factory of One. Here's the 30 second video I made for the conference to explain the purpose of the book. Aside from my inability to hold the camera perfectly still, and my eyes shifting heavenward to my cue cards, I think I do a pretty good job. (Next time, I'll hire a videographer.)

For more info on the book, check out the website here. To order from Amazon, click here.

http://www.youtube.com/watch?v=CKNVgfA8p3A