Personal Lean: Key Point #39

A CEO client was struggling with more than 900 emails in his inbox waiting for his attention. That may not seem like many if you’re sitting there with 15,000 messages in your inbox—most of them worthless “reply all” garbage or Pottery Barn promotions—but all of these were significant, important, and potentially valuable emails that he didn’t want to delete.

He was trapped in a common fallacy: that value is fixed and unchanging.

It’s not. In a world of constraints, importance and value is contextual.

If you were Warren Buffett—if you had no financial constraints—you’d never have to decide what to spend your money on, because you could buy pretty much anything and everything you wanted. Send your kid to a private college. And buy a Rolls Royce. And a $35,000 watch. And take the family on a luxury safari in Botswana. But of course, you probably don’t have as much money as Warren Buffett (you wouldn’t be reading my blog if you did), so every purchase you make presents an opportunity cost: pay for college, and wear a Casio while driving your Geo Metro.

The same equation holds for time. Your time and attention—like your money—is finite. If it were infinitely elastic, you could go to all your meetings, answer all your emails, visit all your customers, and coach all your employees. But of course, it’s not—so you can’t. There’s an opportunity cost every time you choose to do one thing, because it precludes you from doing something else.

Importance and value also degrade over time. Today’s opportunity is often less valuable in three months or three years. Being the first to market brings enormous rewards that competitors struggle to capture. Thanking an employee today for a job well done is more important than recognizing her in a month. Information about your market is important today, but not so much next quarter. As the old saying goes, today’s newspaper is tomorrow’s fish wrapper.

Those 900 emails in the CEO’s inbox? As each one came in, he determined that it was “important” and saved it so that he could come back to it. But the value of each email changed in the context of all 900. Many of them, while important when they arrived, were just not all that important four months and 700 emails later. He could have easily deleted them, but he was stuck in the mindset that they still retained value.

This situation reminds me of something that Jim Lancaster, president of Lantech, wrote in his terrific new book The Work of Management. He explained how his team was spending all its time cataloging errors and managing a database of different kinds of production defects instead of actually fixing the problems when they occur. Not surprisingly, they didn't make much progress on finding and fixing root cause. The big shift came when they focused on taking care of current problems, without worrying about their relative importance. As he writes, “Solving the problem that presents itself now is more valuable than attacking the most important problem we have.”

To be fair, it’s not as though those emails are going to sink his company or prevent him from doing a great job. But if you believe in 5S for the shop floor or the office, then you should apply that tool to those no-longer-valuable emails. Holding onto them is the equivalent of holding onto the junk that’s piled up in the corner of your warehouse, or the tools and jigs for products that you no longer make.

More importantly, there’s a real psychic burden that comes from those messages. The CEO was weighed down by the feeling that he should be doing something about those emails, and felt guilty that he wasn’t on top of them. That pointless psychic burden was a distraction, and wasn’t helping him do his job.

Personal lean point #39: Make friends with your delete key. Recognize the contextual nature of value so that you can let go of the old stuff and focus on what really is important.

Preserve the Core. Stimulate Progress.

In Built to Last, Jim Collins argues that for companies to be sustainable for the long haul (i.e., the “great” companies of Good to Great), leaders must embrace a seeming paradox. They must both honor and protect their fundamental values and beliefs, while at the same time pushing their organizations forward and embracing change.

He calls it a sort of yin/yang principle: on one side you have preserving the core, or staying true to something, and the other side you have stimulating progress. (See a very short video here.)

The best organizations weave this tension into the fabric of the company by creating mechanisms to ensure progress. Collins describes how 3M, for example, stimulates progress in innovation by giving scientists 15 percent of their time to work on whatever interests them; by requiring divisions to generate 30 percent of their revenues from new products introduced in the past four years; by maintaining an active internal venture capital fund; and by creating a dual career track to allow innovators to remain innovators rather than move into management. Granite Rock Company has a policy called “shortpay” to stimulate excellence in customer service: they tell their customers “If there’s anything about an order you don’t like, simply don’t pay us for it. Deduct that amount from the invoice and send us a check for the balance.”

Jim Lancaster’s presentation at the recent LEI Summit reminded me of this concept. Lancaster explained how the progress the company made in the 1990s—the progress that earned them a chapter in Lean Thinking—proved unsustainable in the 2000s. They found that much of their improvement work was simply redoing improvements they made years earlier. They weren’t holding the gains they made. Instead, they were on a kaizen hamster wheel, because their processes were unstable. As Jim Womack explained, “without getting without getting control of processes first, we end up doing change on unstable muck.” 

In other words, Lantech didn’t “preserve the core.” They had the drive to “stimulate progress,” but without the other half of the yin/yang equation to balance their efforts, they kept backsliding. It was only after they instituted a daily management system to prevent deterioration of their processes that business performance leapt forward.

To be sure, this isn’t a perfect analogy: Collins is talking about the core values, philosophies, and ideologies of an organization, while I’m talking about the core improvements realized through kaizen. But based on Lantech’s experience, I think that the analogy is nevertheless useful. 

Here’s how to preserve the core in a lean context:

• Institute a daily management system that reveals deterioration immediately and enables it to be fixed at the right level. As Jim Lancaster explains in his book, “solving the problem that presents itself now is more valuable than finding and attacking the most important problem we have.” 
• Invest in people’s problem solving skills through formal and informal training and coaching.
• Drive out fear (per Deming)—not just fear of being fired or laid off, but fear of failure, fear of criticism, fear of ridicule—and encourage experimentation in the service of improvement. 

Book Review: "Lean Math"

My heart sank when the review copy of Mark Hamel’s new book, Lean Math, landed in my inbox with a 20 megabyte thud. I was an English major in college, and was voted “Biggest Poet” among my classmate quants in business school—I wasn’t really thrilled at the prospect of trudging through 435 pages of equations, formulas, and more Greek letters than fraternity row at Ole Miss. 

The good news is that I didn’t have to read all 435 pages. And neither will you. Lean Math is not a turgid disquisition on some long-overlooked point of lean implementation. Instead, it’s a reference book that will help you all along the stages of your lean journey. Totally new to lean and need to know how to calculate takt time? A little farther along and need help calculating kanban quantities? Really advanced, and want to delve into the math of fractional factorial designs in Design of Experiments (whatever the hell that means)? Check, check, and check.

Although Lean Math caused me PTSD flashbacks to my grad school statistics class, it’s a terrific guide to both theory and practice—including helpful warnings about typical errors in usage of all the formulas and models.

You could probably find most (if not all) of the information through the all-powerful Google search, but you’d be a fool to do so. You wouldn’t be sure of the accuracy of the information you found; you’d have to figure out how to apply the concepts to your specific situation; and it would be drastically more time consuming.

Get Lean Math for the bookshelf. It’ll be a great doorstop when you’re not using it, and it’ll be invaluable when you need it.

Anybody can get lean, right?

My friend and fellow lean thinker Mark Graban just blogged about lean lessons from the movie, Central Intelligence, starring Dwayne “The Rock” Johnson. When he’s asked how he built his amazing body, Johnson replies:

I just did one thing… I worked out for six hours a day, every day, for the last 20 years. I mean, anybody can do it, right?

Mark comments that

When people look at organizations like Toyota or ThedaCare, they’re often caught staring at an “after” picture in a “before and after” scenario. Dwayne Johnson has to keep working out and eating right, just as organizations have to keep improving and have to keep doing the things that made them very successful. People often want shortcuts… easy answers… silver bullets… instant pudding. 

His comments echo an argument I made in chapter one of my book, Building the Fit Organization. Companies that successfully engage in lean make an unshakeable commitment to continuous  improvement. It’s not something they do on occasion, when they feel like it. It’s not an episodic exercise, like a plan to do one kaizen a month.

In fact, the pursuit of organizational fitness is very similar to the pursuit of physical fitness. As I explain in the book:

Don’t try finding a spot on the Stairmaster or in the spin class on January 8th. The busiest week of the year at a gym is the second week of the new year. Fueled by an excess of calories from too much food and drink during the holiday season, people make resolutions to lose weight, work out, and get fit. The gym is packed as tightly as people are packed into their spandex. Of course, by February the gym is back to normal. Most people predictably abandon their resolutions in short order—they’re bored, they’re busy, they’re sick, they’re tired. Life gets in the way. They lack the commitment (or know-how) to sustain their fitness initiative, and the next thing you know, they’re anxiously searching for diet and fitness tips to wriggle into their bathing suits for the summer.

Organizations aren’t so different from individuals. Preceding the new fiscal year, the management team announces its goal to capture the top spot in the marketplace, rolls out 37 new strategic initiatives, and vows to elevate employee engagement and become a great place to work. By the second quarter, it’s business as usual. Organizations get caught up trying to make the monthly or quarterly numbers; departments are overwhelmed by the multitude of new (and often contradictory) initiatives for which they lack the people or the resources; and employees feel no more connection to the company’s leadership and vision than they did before. The organization loses momentum on its initiatives, often fails to achieve its stated goals, and waddles along until the next annual strategic offsite, whereupon the cycle repeats itself.

For both the individual and the organization, the problem is the same. There may be a stated goal—lose 15 pounds, improve muscle tone—but there’s often no clearly defined program to reach that fitness goal. Or even if there is a program, it may simply be a fad that promises huge results with minimal effort: think vibrating belts, Thighmasters, 8 Minute Abs, and the latest diet pills. More significantly, for the people who abandon their fitness efforts, going to the gym and exercising is something that’s external to the daily flow of their lives. It’s a chore that requires additional time and commitment, not something that’s as fundamental and core to their lives as, say, going to work, or playing with their kids, or even brushing their teeth.

In the same way, most organizations have annual goals—take the top spot in the market, lift employee engagement— but they lack clearly defined improvement programs to reach their goals. As with individuals, there is no end to the number of business fads that promise to get companies to the promised land—emotional intelligence, six sigma, business process reengineering, management by walking around (MBWA), etc. But efforts to achieve those goals are episodic (at best) or sporadic (at worst), because they’re not seen as integral to the organization’s daily operations. They’re made “when we have some free time,” or before the boss asks about them at the quarterly performance review.

Truly fit individuals don’t so much make a generic commitment to exercise as much as they weave exercise and health into the daily fabric of their lives. Similarly, truly fit organizations don’t so much make a commitment to an improvement “program” per se, as build improvement into the way they operate on an ongoing basis, everyday.

Or as The Rock would say: “I just did one thing… I worked out for six hours a day, every day, for the last 20 years. I mean, anybody can do it, right?”

Book Review: "The Lean Turnaround Action Guide"

I just finished one of the best business books I've read in a long time -- Art Byrne's Lean Turnaround Action Guide. Whether or not you've read his first book, this is an invaluable resource for business leaders, middle managers, or even consultants. Unlike his earlier book, in which he made the case for embarking on lean by explaining why lean is the only sane business strategy, in this book he shows the reader how to take the first steps down the lean road.

The Action Guide is a case study covering the initial steps of a lean implementation at a fictional company, following the process that Byrne has used for the past 30 years. Where appropriate, he discusses core philosophies -- for example, "lead from the top" -- but the focus is on what that means, and how to convince executives to actually do it. What do you say to them? What are the likely arguments from the resistors? How do you overcome them?

At the same time, Byrne doesn't bog down in a discussion of tools. After introducing tools like kaizen events or standard work combination sheets, he quickly pivots to the more important issue -- how and when to introduce these tools to the leadership team. You'll need to go elsewhere for detailed explanations of how the tools work. As a result, by the end of the book, you're left with a clear roadmap for how to orchestrate the conversion to lean: what language to use; how to choose the functional areas to start in; how to involve the leadership team; and how to deal with the inevitable obstacles that will arise. 

The approach Byrne describes stems from his own successful experiences at Danaher and as a private equity investor.. But I wonder whether his approach would work for all companies. What about the companies that he didn't buy? Could he have followed this model with those other firms? Or is there something about the management and culture of those other companies that precluded this aggressive approach and mandated something slower -- and perhaps even led him to not invest in them? Is it possible that a slower, more gradual introduction would result in equally good results over the long term? Paul Akers, for example, is doing impressive work at his company, FastCap, but he's not following Byrne's shock and awe method. 

Notwithstanding these questions, the Action Guide is a terrific addition to anyone's lean library. It's well-written (and CAUTION -- Kellyanne Conway moment ahead -- fabulously edited by my own editor, Tom Ehrenfeld) in a brisk, direct tone that I imagine to be reflective of the way Byrne talks. It's a fast read and well worth the investment.

What You Can Learn from the World's Greatest 400m Hurdler

Edwin Moses was the greatest 400m hurdler the world has ever seen.

Moses won two Olympic gold medals in the 400m hurdles (and would have won a third had it not been for the 1980 Olympic boycott) and a bronze medal. He set four world records and won 122 straight races over 10 years. Even now—nearly two decades after his retirement—he owns four of the fastest races ever run, including the second fastest time in history.

Why should you care about this track and field legend? Because the way he approached his event holds lessons for you, whatever your job. Moses was certainly more physically gifted than your average jogger, but—perhaps because of his background as a physics major—it was his relentless focus on process and measurement that etched his name in the record books.

A little background
There are 10 hurdles in a 400m hurdle race. Conventional wisdom held that runners should take 14 steps between hurdles. Taking 13 steps for the whole race was considered impossible, because it was physically too taxing to hold the longer stride length for 400m. Taking 15 steps between hurdles would result in a stride too short to be competitive. However, taking 14 steps means that you switch lead legs for each hurdle. The problem is that almost everyone is better/faster leading with one leg than another.

Most hurdlers run some combination of 13, 14, and 15 steps. If they’re one of the rare athletes who can lead well with both legs, they might take 14 steps. Otherwise, they usually start with 13 steps, and then switch to 15 steps in mid-race when they get tired. 

The Moses breakthrough
Moses, who was self-coached, realized that taking an odd number of steps would enable him to lead with the same leg over all the hurdles and thereby maintain a consistent rhythm through the race. If he could do that, he’d be faster than other runners who were changing legs or taking smaller strides.

In the language of Toyota Kata, his challenge was to find a training method that would enable him to hold 13 steps for the whole race. And that’s precisely what he did. Of course, he did all the necessary technique training to improve his hurdling form. But largely he trained like a middle-distance runner to develop enough strength to hold his stride length for the full 400m. Moses almost always took 153 steps in the race, regardless of the weather (hot? cold? windy?) or the competition (Did he have an early lead, or was someone pressuring him?). Occasionally, he finished in 152 or 154 steps, but that one stride difference came in the final sprint to the finish, not in the middle of the hurdles. Those were always 13 steps. To this day, he’s the only world-class hurdler to consistently run the whole race in 13 steps.

What you can learn from Moses
Moses studied his event—which is to say, his job—thoroughly. He worked to improve his hurdling technique constantly. He experimented with different stride lengths and different stride cadences to discover the optimal mix for him. He developed a unique training regimen that gave him the physical endurance to maintain his form throughout an entire race.

Have you actually studied the myriad processes that comprise your job? Have you examined each step to develop deep understanding? How often have you experimented with different methods?

Even though he was “just” an athlete, Moses approached the 400m hurdles like a scientist. You should too. 

Finding the Sweet Spot for Organizational Structure

Flow is one of the key tenets of lean. To that end, continuous improvement professionals exert enormous effort to improve both information and material flow in factories. However, we don’t usually see as much effort in the office environment, where knowledge—not widgets—is the product, and the cost of poor flow is not as easily quantified. Information processes and flow are usually less-well defined in the first place, and often encrusted with bureaucratic barnacles that do nothing but impede flow.

Peter Drucker once quipped that, “Much of what we call management consists of making it difficult for people to work.” I suspect that Drucker was saying poor management makes it harder for people to work. Good management—a rarity—makes it easier. The truth is that all business processes require a certain amount of management structure to enable operations to flow smoothly, but often it’s the wrong amount of structure for the job at hand.

With no structure at all, you have total chaos—no one knows what needs to be done, who’s responsible for doing it, or even what the goals are. Many start up companies exist in this zone, although they’re often saved from disaster by virtue of having everyone sitting in the same room. They survive the lack of structure by virtue of easy, uncomplicated communication channels. As they grow, however, they either create appropriate process structures or they die.

When there’s just a bit of structure, the pain of rework bites hard. At a $500M footwear company I once worked with, the founder and CEO—long removed from his role product development—decided that he didn’t like a particular style his product team had designed, developed, and purchased. He diverted a container that was en route to the US with $400,000 worth of shoes to Africa, where he unloaded everything at a loss. The sales, marketing, product, and customer service teams were stuck at the 11th hour (well, the 12th hour, actually) adjusting for the CEO’s violation of structure.

Too much structure creates business “clutter,” which is typically manifested as excessive (and often low-value) meetings, the necessity of obtaining approvals from multiple tiers of management, an overload of initiatives, and a nearly suffocating volume of email. By now it’s practically a business fable, but when Alan Mulally took the reins at Ford in 2006, senior management actually had “meetings week”—five days each month in which executives held non-stop meetings. The preparation for that week, combined with the burden of having the leadership team unavailable for such a long period of time, hamstrung Ford’s ability to react to operational issues in a timely manner.

When structure reaches its extreme, the organization effectively suffers bureaucratic paralysis. Virtually nothing gets done. Government agencies are the poster children for this condition, although many companies experience it on a localized level. The stories are, in the most literal sense, nearly unbelievable: manager approval required for replacing an ID badge, or two approvals (!) needed to order new toner for a copy machine. 

The right amount of structure for business processes fosters coordination without dangerous ambiguity or administrative burden. Looked at from a lean lens, this is the place on the continuum where the rules and structures create the most value with the minimum waste. WL Gore’s “lattice” structure of management is an excellent example of an organization in this position. The $3 billion company broadly distributes leadership responsibility throughout the organization, allowing employees to make “above the waterline” (i.e., low-risk) decisions on their own, and only requiring approvals for “below the waterline” (high-risk) decisions.

It would be nearly impossible for another company to copy Gore’s model of management. But it’s very much within the purview of the OpEx professional to apply this kind of thinking to the various office and administrative processes in any firm. It’s simply a matter of adding another layer of analysis to the standard value stream analysis that’s already being done

Why Layoffs Don't Make Your Company Fit

If you’re trying to get fit, don’t try to lose weight. And if you’re a business trying to get “fit,” don’t try to cut costs.

Real fitness isn’t defined by overall weight, or by body fat percentage. Sure, if you’re 5’6” and weigh as much as a double-door Sub-Zero refrigerator, you should probably take a step back. Then again, if you’re a 5’10” fashion runway model tipping the scales at 102 pounds soaking wet, you’re probably not very fit either. The important point here, is that real fitness isn’t just about body mass index. It includes cardiovascular capacity, muscular strength, and flexibility. And if you’re an athlete—even a recreational one—you also need coordination, agility, speed, and quickness. You can’t gain those capabilities just by dieting.

There’s an organizational parallel here: a company can’t get “fit” simply by cutting costs. To be sure, you may be able to improve your income statement in the short term by laying off workers, closing offices, banning color copies, and no longer catering meetings. However, organizational fitness isn’t just about low expenses. It includes the ability to react quickly to market shifts, to create and deliver new products and services, and to continually improve process efficiency and effectiveness—all in the service of delivering greater value to customers. Cutting expenses as a way to organizational fitness is like cutting calories as a way to personal fitness. At its logical extreme, it results in corporate anorexia—a feeble organization filled with dispirited employees, unable to compete in the marketplace and serve customers.

Sunbeam Corporation is the poster child for this misguided approach. Sunbeam hired “Chainsaw Al” Dunlap (also known as "Rambo in Pinstripes") in 1996 to turn the company around. Dunlap, widely viewed as a turnaround expert, was legendary for his ruthless approach to financial improvement, which typically involved firing a large portion of the workforce. True to form, within a year, he laid off half the company’s staff (6,000 people) and eliminated 90% of the company’s products. This lowered expenses by $225 million per year and nearly quadrupled the stock price in less than two years. But cutting costs has its downside. He moves made the company less capable of reacting to customer needs -- and by 2001, the company was bankrupt.

There’s another parallel between dieting and simple expense cutting: neither work in the long term. It’s common knowledge that the vast majority of people who lose weight on a diet regain it within a year or so. Organizations that just cut expenses tend not to maintain their new weight either. There’s no concomitant reduction in work after layoffs—it simply gets shifted around. Employees take on the additional responsibilities of a colleague or a boss. They work longer and harder, but because the underlying processes aren’t functioning any better, and because these companies haven’t focused on improving how they operate, work doesn’t get done faster, better, or more easily. Eventually, after the financial crisis passes, the organization eases travel restrictions, permits color copying, and starts catering meetings again. Gradually, the company hires people to refill the roles that were eliminated earlier. The weight comes back on, and the organization is just a market downturn away from another round of layoffs and cost cutting.

The alternative is for organizations to focus on building fitness, not on reducing costs. In this context, fitness means becoming faster, more agile, and better able to take advantages of new opportunities and serve customers better. It means examining the processes by which the organization operates. It means focusing on the means by which work is done, not the (financial) ends. A corporate “fitness program” develops employees’ capacity to solve problems and improve performance, with the long-term goal of increasing the value provided to customers. And with greater customer value comes improved financial performance. In fact, cost reduction is an inevitable outcome of the pursuit of fitness—but cost reduction is not the primary objective.

Wild Things Gear makes technical outdoor apparel that consumers can customize for their own needs. The company is a perfect example of how rethinking processes can make an organization more agile and better able to adjust to market shifts. CEO Ed Schmults believes that customization is especially important for technical clothing, because it allows customers to create the functionality that’s important to them.

Product customization is nearly impossible if you manufacture in Asia (like virtually all outdoor companies). Asian factories are built for mass production: long production runs of hundreds or thousands of garments with minimal variation. It’s also tough to get products to consumers quickly if they’re produced halfway around the world—ocean shipping, customs clearance, and logistics (ocean port to warehouse to consumer) adds three to four weeks of transit time. Airfreight is much faster, of course, but it’s cost prohibitive for the company, since most consumers aren’t willing to pay for that service.

Schmults realized that to deliver the increased value that comes with a customized product, he’d have to develop the ability to make clothing in the United States. He’d have to get faster, more productive, and more skilled in apparel manufacturing—a tough job, given that the domestic apparel industry has been eviscerated over the past 20 years as companies have closed their factories and outsourced their work to Asia. However, using lean manufacturing techniques such as cellular production, one-piece flow, kitting of components, etc.—along with extensive training—Schmults was successful in making technical outdoor gear in the US. Now, with a website that allows customers to configure their products online, domestic production, and the elimination of retailers for distribution, consumers can go from designing their own jacket to delivery at their house in only 14 days.

So, more value to the consumer—but what about the company? Moving away from traditional overseas mass production has meant faster production, less finished goods inventory, and lower working capital requirements. Quality is higher, and overall costs are lower. Indeed, even as sales are growing steadily, the company’s return rate is only 6.8%, whereas most fashion brands have return rates as high as 40%—and that difference goes right to the company’s bottom line.

That’s what real corporate fitness looks like. Not layoffs. Agility.  

How to Honor Your Customer

Many companies talk about honoring the voice of the customer, but how many actually bring the customer's voice to the shop floor? MarquipWardUnited (MWU), a division of Barry-Wehmiller does, and in an elegant and powerful way. 

The company graciously allowed me to tour their facilities in Maryland a couple of weeks ago. The  evidence of their "Living Legacy of Leadership" was everywhere, from the team huddles, to the visual boards throughout the shop floor, to the way in which the company gave all employees an extra day off because they just completed a year without an accident.

[Quick digression: think about that for a moment. The company gave everyone an paid vacation day because workers were able to stay safe for a year. There's a huge economic benefit to the company for not losing any worker days, and the company shares that benefit with the people who make it happen. That's real "respect for people" in action.]

Making a connection with customers is a challenge for this plant. Like shop floor workers in most companies, MWU workers don't ever get to meet their customers. They work hard to meet customer needs, but they don't really know who's using their machines. And that's where the customer profile cards come in. The key details about each customer are put on a bulletin board so that workers can see who's buying their machines and why. 

These cards (actually about 8½ x 11) tell workers which machines the customer bought, why the customer bought them, and what they'll be used for. They also provide information about the customer: where they're located, how many people work there, and what the new machines will mean to the customer's success. And if people want more information, the salesperson's and project leader's names are on the card as well. 

We all know (or should know!) how Barry-Wehmiller honors its employees as full human beings, not just a pair of hands that must be bought. But these cards show that the company honors its customers as human beings as well, not just as wallets dispensing money to fund the company's operations. 

Think fitness, not weight loss.

Weight Watchers no longer wants to sell diets.

After suffering a multi-year decline in sales, the company is now focusing on fitness rather than the strict discipline and self-abnegation that people associate with dieting. As the Wall Street Journal reported:

“We may be the greatest diet company on the planet but the consumer isn’t thinking strictly in diet terms anymore,” said James Chambers, CEO of Weight Watchers International Inc. “They aren’t thinking of diet and deprivation as the path they want to take; they’re thinking much more holistically.”

A key element of the company's new initiative, called “Beyond the Scale” emphasizes overall physical fitness, not just calorie reduction. Key to the change in focus was the realization that Americans still want to lose weight but they don’t want to give up too much. Debra Benovitz of Weight Watchers says that their customers "want a lifestyle shift versus a short-term fix.” 

This is a perfect analog to how organizations should approach their lean/continuous improvement efforts. As I argue in my book Building the Fit Organization, a focus on cost cutting (or dieting) is dispiriting and ultimately doomed to failure. No one (except perhaps the CFO) gets excited about financial deprivation. Instead, organizations must integrate lean (or fitness) activities into daily work. That means teaching people a structured approach to solving problems; helping them figure out how to make their work easier and better; strengthening the connection between all employees and the customer; etc. That creates the "lifestyle shift" that companies need for long-term success. 

There's so much more to physical fitness than mere body mass index. There's cardiovascular health. There's strength and flexibility. There's endurance. For organizations, there's so much more to lean than cost reduction. There's market responsiveness and agility. There's employee engagement and commitment. There's reduction in working capital needs. There's better supplier relationships and increased customer satisfaction.

Measuring only one element in a program, whether that's body weight (Weight Watchers) or item cost (lean) is a dead end that saps people's commitment to the process and reduces the potential benefits. 

The Folly of Stretch Goals

I just finished listening to the terrific Planet Money podcast on the Wells Fargo fiasco. You probably already know the big picture of how the bank illegally and unethically opened accounts for customers. But this episode brings the fraud down to a human scale by interviewing some of the Wells Fargo employees. While John Stumpf was lauded in the business press for his "8 is Great" mantra (that's eight accounts per customer), this goal created what employees called a "boiler room" culture and a "grindhouse."

Of course, W. Edwards Deming fulminated against the absurdity of arbitrary numerical goals. Point #11 of his obligations for management states: "Eliminate numerical goals, numerical quotas and management by objectives."

Back in 2012, I wrote an article for the Harvard Business Review on The Folly of Stretch Goals -- and really, what is Stumpf's "8 is Great" but a stretch goal? I argued that stretch goals can be demotivating, can cause excessive risk-taking, and can lead to unethical behavior. I cite Sears as an example. . . and now you can add Wells Fargo to the list.

In Profit Beyond Measure, Thomas Johnson wrote:

"That happens a lot, we honestly translate aims to goals. And then we do stupid things in the name of the goal get it the way of the aim. We forget the aim sometimes and put the goal in its place."

I'm no oracle, and I'm certainly no Deming. But I do know that the evidence is pretty clear that when you set arbitrary stretch goals, you're taking a bet that may very well end up with you testifying before Congress.

You've Got to Live Lean to Lead Lean

Lou Gerstner weighed in on the Wells Fargo scandal the other day in the Wall Street Journal. He wrote that CEOs who blame a flaw in their company’s culture misunderstand how culture is created and its role in determining corporate behavior.

"What is critical to understand here is that people do not do what you expect but what you inspect. Culture is not a prime mover. Rather it is a derivative. It forms as a result of signals employees get from the corporate processes that structure their work priorities."

His argument that culture is a result, not the cause of corporate processes is only partially correct. Culture isn’t static. As Edgar Schein has pointed out, the creation of organizational culture is a continuous circle: behaviors and recognition create culture, and culture leads to certain behaviors. And this is why it’s essential for any leadership team to model the lean behaviors they hope to instill in their organization. If the leadership team doesn’t live lean, they can’t lead lean.

It’s clear that at Wells Fargo, the stated value of “putting customers first” does not—cannot—coexist with a system that rewards employees for selling more products to those customers, irrespective of customer needs. It’s equally clear that in your organization, the stated need to embrace continuous improvement does not—cannot—coexist with a system that prioritizes cost savings over learning; that asks front-line employees to work differently, but not the C-suite execs; that requires mid-level managers to participate in lean activities, but not the vice-presidents. 

Gerstner points out that it’s the cumulative effect of processes such as performance measurement, compensation, and recognition (among others) that shape corporate culture. They also shape the likelihood of success in your pursuit of lean. Does your company reward individuals or teams for learning? Does your company recognize and celebrate the acquisition and deepening of knowledge about lean, or only revenue, profits, and cost reduction? Can you really expect your employees to care—to truly care—about all this continuous improvement bloviation when you haven’t built the systems and processes that elevate it to the stated level of importance?

If lean really is important to your organization, then you have to build systems to support it. It’s a large part of what the Lean Enterprise Institute calls the “daily management system.” That means that everyone—everyone—gets involved in lean activities, that everyone gets recognized for their lean work, that everyone gets rewarded for adopting (even if they don’t yet fully embrace) the essential behaviors. That’s how you build a culture of continuous improvement. 

Can you run your business on a 5-hour workday?

Fifteen months ago, Tower Paddle Boards abandoned the standard eight-hour workday. Since June 2015, employees work five-hour days, from 8am to 1pm. Five hours. Five.

You can probably imagine all kinds of problems with such a short workday, but no: the same amount of stuff gets done in four days than in five, mostly because when you have less time, you tend to compress stuff out that doesn’t matter. The 10-person firm made it to the Inc. 5000 list of fastest growing companies with a 40% increase in sales, and will hit $9 million in sales this year. 

The switch to a five-hour days was carefully planned. They did a test run for a few months under the guise of "summer hours." They instituted a 5% profit-sharing plan to get employees to focus on outputs (production), not inputs (number of hours on the clock) in order to remind them that they had to be as productive as they were during the old eight-hour workdays. They used improved technology -- a better FAQ page, video tutorials for customers, automation of previously manual processes -- to reduce the burden on the team and to make work flow more quickly. You can read all about the changes here.

However -- and this is the key point -- these improvements were driven by a goal to do more work in less time so that employees could have richer personal lives. (They are a surf lifestyle company, after all.) By restricting the critical resource of time, everyone was forced to figure out how to produce more efficiently. 

Tightening the constraints on office hours is no different from a company telling a division that it has to reduce lead time on a product, or take some percentage of cost out of component. Changing the standard forces the organization to figure out a better way to work. The only difference in the Tower Paddle Boards story is that the new standard was imposed for better work-life balance (surely an element of respect for people), and -- most importantly -- that the president challenged the unspoken assumption that people had to work 40 hours per week. 

Tower Paddle Boards is just one example. Numerous companies, among them KPMG and Reusser Design have moved to four-day workweeks (although they work 10-hour days), as has Slingshot SEO. Jason Fried, CEO of Basecamp does the same. He says, "the same amount of stuff gets done in four days than in five, mostly because when you have less time, you tend to compress stuff out that doesn’t matter." And all these CEOs report that not only do employee morale, engagement, and retention skyrocket, the work schedule makes them the employer of choice in their geographic area. 

I've written before (here and here) about the way that the lean community treats managerial work differently from shop floor manufacturing work. We've come to accept that office work won't get done in 40 hours per week, and that working late at night or on weekends is normal. Instead, we should be seeing that behavior for what it is: a sign of a problem for which weekend work is simply a countermeasure.

The example set by Tower Paddle Boards shows the benefits of forcing a new, higher standard on office and managerial work. You may not be able to run your business on a 20-hour week, but you might be surprised at how much more efficient you can become. 

Are you taking the waste out of your decision making process?

As a lean organization, you probably spend much of your time trying to improve the core processes behind your products and services. But what about your decision making processes?

One of the biggest wastes I see in the office and administrative environment stems from unclear decision-making processes, particularly those that cross functional or departmental boundaries. A team makes a decision and then another department second-guesses it or asks for a change. You often see this dynamic between sales and marketing, or sales and product development. ("What? Of course we didn't want it in green! If you had just asked us, we'd have told you that we wanted pink!") And that, of course, leads to wasted time, wasted money, piles of rework, and all kinds of frustration. When I worked in product marketing at Asics, I was involved in a couple of colossal miscommunications involving the targeted distribution and shipment of what was supposed to be a premium, restricted, product. 

No one is to blame, of course. It's a system problem. Not having clarity around WHO gets input into a decision and WHEN is a recipe for failure. It's like getting on board an airplane and giving everyone on board a say in both the route and the destination. ("Slippery Rock? No, I think we should go to Manitoba.") But really, it can happen between any two or three departments -- anytime there's a silo and a handoff, there's a chance for this kind of snafu. 

The RACI matrix is often trotted out as a way to improve meetings (although I prefer DACI, with the "d" standing for "doer," since I can never remember the difference between "responsible" and "accountable"). But it makes good sense to use it for an entire workflow as a way to clarify the inputs at all key decision points. 

If you've got teams or departments that are continually frustrated by having to loop back and do rework on a project, give it a try. You might be surprised at how much waste you can remove -- and how much time you can free up for value added work. 

The Folly of MBWA

Paul Akers, the president of FastCap, commits to regularly visiting the front lines of his company as part of his leader standard work. But don't confuse this commitment for "management by walking around" (MBWA). Akers does it as much (or more) for his own edification than for the training of his employees. In his view, they know how to do their work, are familiar with the problems, and know how to solve them. Going to the shop floor enables him to see those problems firsthand, and then use his authority to help solve them. He explains that

The most important place for me is on the shop floor doing the work with my people, shoulder to shoulder. The more I do it, the better my company gets. . . . I find out the stupid work that I make my people do. I’m seeing all the things my people are struggling with that I have the power to change, but because I don’t know about it, I can’t change it. The more [I do it, the more] I find out that my people appreciate it when I’m coming there to help them. To learn. To empathize. And to improve processes. . . . At the end of the day, if you want to take your company to a whole different level, get on the shop floor. Deliberately. No differently than we “3S” everyday (sweep, sort, and standardize), and we have a meeting for a half hour or 45 minutes to teach and train our people for eight years that we never miss. Deliberately, in the same fashion. Get onto the shop floor on a regular basis and find out what’s really happening. And I’m not talking about with your clipboard, with your iPad, with your phone taking notes—I’m talking about doing the work. Doing the work that you’re requiring your people to do.

For Akers, seeing and doing the work first-hand—not hearing about it in a conference room—makes him a better leader. It brings him in closer contact with the work that’s being done and with the people who are doing the work. What could be more important?

But as I wrote earlier, these visits differ from MBWA, a concept popularized by Tom Peters and Bob Waterman in their seminal book In Search of Excellence. Peters and Waterman also encouraged leaders to get out of their offices to randomly walk around the company and see first-hand what’s going on. However, they specifically advise managers to make their walks unpredictable, both in terms of where they go and when they go. Peters and Waterman believe that if front-line workers are expecting your visit, you won’t see what’s really happening on a regular basis. They argue that front-line staff will work differently; they’ll clean up their work area; they’ll cover up small problems. Managers and leaders won’t get an accurate picture of how the processes are operating. This is a fundamentally different perspective from the one held by the leaders at companies like FastCap—and one that, I’d argue, is antithetical to building a truly fit organization. If you’ve been successful in driving out fear and in de-stigmatizing problems, people will have no difficulty showing you the reality of their situations.

In Building the Fit Organization, I use the metaphor of physical fitness to explore the core concepts of lean thinking. Using that metaphor, imagine that your coach only comes by unannounced to check up on you and ensure that you’re following your training program. In the best case, you’d be confused (Why is my trainer at my front door at 6am while I’m still in my underwear?), and in the worst case, you’d feel disrespected (What—he doesn’t trust me to do my workout?). Any momentary surge of motivation would quickly evaporate when her lack of trust in your commitment hits home. Conversely, imagine that you have regularly scheduled sessions with your coach, and that you know precisely what issues you’re going to address during each visit. Would that make it difficult to assess progress or diagnose problems? I doubt it. In fact, it would probably make you more attentive to your recent workouts, or to the minor twinges that might indicate the onset of an injury, so that you can discuss them with him in full.

At its core, MBWA presumes an environment of suspicion, mistrust, and fear. Workers will hide problems, so we have to sneak up on them to see what's really going on. Leader standard work, as exemplified by Akers, presumes an environment of trust, humility, and cooperation. Which environment are you trying to build? 

In Praise of Ignorance

If you have a deep reservoir of experience with lean and a desire to help companies reap its benefits, there’s a nearly irresistible temptation to foist your understanding of improvement upon the people working in the organization rather than allowing people to learn and improve in their own way. As John Shook (CEO of the Lean Enterprise Institute) put it:

The notion of experts, often authorized through a certification process, too often devolves into an approach to improvement in which teams of experts swoop in to “do improvement to” the people who are trying to do the work, the frontline value-creating work of the business.

It doesn’t feel that way, of course. It feels like real help. With the best of intentions, you deploy your proprietary conceptual model for improvement that has worked so many times before. You expertly map value streams; identify improvement opportunities; install kanbans for inventory control; create better layouts for manufacturing cells; and set up visual management systems to monitor work processes.

The motives are pure—after all, you’ll get results more quickly, which is good for your customer. But over the long run, individual recidivism and operational regression to the mean is unavoidable. If you doubt that, just try listing the number of organizations that you think have really succeeded with continuous improvement. I bet it’s a pretty short list.

Mark Rosenthal, an outstanding lean consultant in the US, puzzled why so many organizations plateaued in their pursuit of lean. He found that experts,

were essentially pushing them [managers] aside and “fixing” things, then turning the newly “leaned” area over to the supervisors and first line managers who, at most, might have participated in the workshop and helped move things around. So it really should be no surprise that come Monday morning, when the inevitable forces of entropy showed up, that things started to erode.

There were no experts when the Toyota Production System was first being developed. Without years of experience practicing lean, and without a codified system of knowledge, no one was an expert—not even Taiichi Ohno. Workers, supervisors, and managers saw problems and groped their way towards solutions without guidance—because there was no one who actually could provide guidance. The tools that today’s experts eagerly deploy were developed organically by the workers directly affected by those problems in the pursuit of a countermeasure to a specific situation. But they developed those countermeasures by themselves. 

I haven’t worked at Toyota—or even at a company that embraced continuous improvement. I haven’t been insulted by Shingijutsu consultants in the course of a five-day kaizen. The only black belt I have is from Men’s Wearhouse, not from a lean six sigma program. I doubt Jim Womack or Dan Jones could pick me out of a police lineup. If I’m honest about it, the depth of my knowledge of the Toyota Production System is like a kid’s wading pool compared to the ocean of wisdom of the deeply experienced lean thinkers in the world. But in some ways, I think this makes me a better consultant when I help companies in their lean journeys.

A few months ago, I was working with a client on a shipping problem. Their biggest customer changed their policies, and instituted a penalty if their weekly orders weren’t received by Wednesday. This was a full day earlier than my client had been able to ship up to that point, so they were facing either a near-certainty of chargebacks, or the need to hire more workers in the warehouse. 

What I don’t know about warehouse operations could, well, fill a warehouse—and at that point, I had never done any improvement work in a warehouse. As a result, there was no way for me to “do improvement to” the distribution team, even if I wanted to. What I do know, however, is that in most processes where speed is an issue (as opposed to, for example, quality or safety), the waste of waiting is enormous. And with that level of lean knowledge, I could encourage the the improvement project team to simply walk through the shipping process and look for places where people were waiting for information or materials. 

Sure enough, the workers saw the needless handoffs and the unnecessary steps that forced the pickers and packers to wait. They developed the improvements to eliminate those wastes and smooth the flow of products and information through the process. And they’ve continued to modify and improve that process every few weeks, as they come up with new ideas. They’ve cut the time needed to process the shipment from three days to one or one and a half (depending on the order size).

Had my lean experience been deeper, I probably would have taught them process mapping, designed visual controls, and helped them level the workload of the various departments involved. They would have dutifully followed my instructions, but they’d never have owned the improvements. Performance would probably have slipped over time—and without a doubt, they certainly wouldn’t have continued to tweak the system to make it work even better. 

If your continuous improvement efforts are stalling, consider whether you’re relying too much on experts who are “doing lean to” people. The fathers of lean didn’t have experts they could rely on, and they did pretty well. Maybe you should try professing ignorance and letting the workers solve the problems.

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(Note: This article was first published at the Business Transformation & Operational Excellence Insights website: http://bit.ly/2b7omF7)

When Less is More

Shortly after joining Target as the company’s new CIO, Mike McNamara told his boss that his budget was too big:

“We were just doing too many things. I mean we had over 800 projects. Even a company as big as Target doesn’t have 800 priorities.”

I’ve often written about the problems with individual attempts to multitask. In her book, The Outstanding Organization, Karen Martin wrote extensively about the corporate analog—how the lack of organizational focus leads to lousy outcomes, including frustration, inefficient allocation of resources, and poor customer service. (See Tony Rizzo’s bead game for an elegant simulation of this problem.) The fact is that both humans and organizations have a limited ability to do multiple things at once.

But it’s not just ongoing operations that fall victim to the lack of focus. Continuous improvement efforts often make the same mistake. In the rush to improve, and under pressure from leadership, internal kaizen promotion offices and external consultants often cram multiple initiatives and kaizen events into the project pipe in the hopes of realizing rapid benefits in SQCDM (safety/quality/cost/delivery/morale). But the result of too many projects is that very few ever get done well, and none get finished in a timely fashion. Little’s Law applies to corporate initiatives, not just customers in a Starbucks queue.

Hoshin kanri/strategy deployment is a well-established way to ensure that you don’t get 800 projects on the board in the first place. But if your organization doesn’t do strategy deployment, you can at least begin by seeing how well your projects align with the larger strategic priorities. That’s what McNamara did at Target: he convened a meeting of the company’s top executives, weighed each project against their strategic priorities for growth, and cut the list from 800 projects to 80. 

The result is faster execution and better concentration of resources on the important few, rather than the trivial many.

Sometimes less is more. 

"Lean closet"? Stop the madness.

Clothing company Cuyana advocates a minimalist fashion lifestyle, encouraging women to only buy quality items that they truly love. Rather than producing the cheap, replaceable items that dominate the market (think: H&M), Cuyana manufactures more expensive, but more durable, pieces. The company calls this shopping philosophy “lean closet.”

The timing for this philosophy couldn’t be better. Japanese organizational guru Marie Kondo’s approach to a better life through decluttering by (among other things) throwing away old or unloved clothing has become a sensation, spawning two best-selling books and an app.

Regardless of what you call it, lean thinkers will recognize familiar elements of 5S in all of this. And honestly, there’s nothing wrong with reducing the production of disposable crap and getting rid of stuff you don’t wear or use. But at the risk of sounding like an irritating schoolmarm, calling it “lean closet” does a disservice to the word “lean,” because it runs the risk of making people think that “lean” only means “less.”

Author and lean practitioner Norbert Majerus of Goodyear runs a terrific exercise in his lean workshops in which he has attendees pair up, stand face-to-face, and memorize the other person’s appearance. Then he tells them to face away from each other and make a change. Almost everyone takes something away—they remove their glasses, take off hair bands, pull pens out of their shirt pockets, take off sweaters, etc. Even though everyone is standing in a meeting room with pencils, notepads, highlighters, water glasses and the like, virtually no one picks up any of these items. No one adds anything to their appearance. As Majerus points out, when we think of change in a lean context, we tend to think we have to remove things. We have to reduce. We have to do without.

Obviously, eliminating waste is a central idea in lean thinking. But when “lean” is used as a synonym for “less,” it leads people to think that’s all there is. Less stuff in your house. Fewer clothes in your closet. It misses all the truly important aspects of lean—like, say, respect for people. Or problem solving. Or creating value for customers.

So, let’s call it “smart shopping.” Or “sustainable fashion.” Or “intelligent consumption.” But please take “lean” out of the closet. It’s a short step from there to the old joke that lean means “less employees are needed." And that's not helping anyone.

What is real fitness?

In Building the Fit Organization, I argue that organizations need to think about "fitness" -- flexibility, agility, and resilience -- rather than simply weight loss (i.e., cost cutting).

Now there's a new attitude permeating the world of physical fitness, which echoes my recommendations for organizational fitness. Athletes increasingly see exercise for sculpting the perfect body or for weight loss as less important than exercise for performance -- witness the growing ranks of people engaging in parkour, cross-fit, and acroyoga. According to the Wall Street Journal, 

"one of the key features of this new fitness movement is an emphasis on working out for performance and a rejection of the increasingly outmoded aesthetic of emaciation. When your focus shifts from your reflection in the mirror to how well you function in the world, a number of things happen. You may well look better naked, but you will also become more agile, more flexible, stronger, more confident and mentally sharper."

This attitude is consistent with where we're trying to go with lean. Rather than focusing on emaciation or accounting gimmicks that make the reflection in the books look good, we need to focus on the organization's function in the world. And if we achieve that, we'll be more agile, flexible, and stronger. 

The problem is that after every financial downturn, companies focus on cost cutting. They lay people off, close offices, and cut back on all possible expenses. But the vast majority of these organizations tend not to maintain their new expense base. More often than not, there’s no concomitant reduction in work — it simply gets shifted around after layoffs. Employees take on the additional responsibilities of a colleague or a boss. People work longer and harder, but because the underlying processes aren’t functioning any better, and because these companies haven’t focused on improving how they operate, work doesn’t get done faster, better, or more easily. Eventually, after the financial crisis passes, the organization brings back the coffee machine, permits color copies, and caters meetings again. The company lifts travel restrictions. Gradually, the company hires people to refill the roles that were eliminated earlier. The expenses come back, and the organization is just a market downturn away from another round of layoffs and cost cutting. In fact, McKinsey estimates that only 10 percent of cost reduction programs show sustained results three years later.

The alternative is to focus on improvement, not on cost cutting. In the world of physical fitness, that means learning and skill development: 

"The effort is about learning, not just pain. This was a foundational truth for the Greek gymnasion, which served as a place of both athletic and intellectual instruction. But ever since, it seems, we have tried to separate mind and body, to the detriment of both. One of the key insights of the new attitude toward fitness is that mind and body are best improved through the labor of skill development. This notion is being articulated more these days, but it has been implicitly understood for centuries."

In the world of organizational fitness, that means operational excellence. It means examining the processes by which the organization conducts its business. It means focusing on the means by which work is done, not the (financial) ends. A corporate “fitness program” develops employees’ capacity to solve problems and improve performance, with the long-term goal of increasing the value provided to customers. And with greater customer value comes improved financial performance. In fact, cost reduction is an inevitable outcome of the pursuit of fitness—but cost reduction is not the primary objective. 

For too long, athletes have separated the mind and the body in their training. Similarly, for too long business leaders have separated the means from the ends in their desire to achieve financial results. Neither has worked very well.

Let's follow the lead of the cross-fit, parkour, and acroyoga athletes and labor for skill development. 

Come to my A3 Thinking Class on Jun 28 in Oakland!

I'm teaching a full-day class on A3 Thinking & Problem Solving for the Association of Manufacturing Excellence on June 28 in Oakland, CA. 

Most people work in organizations that can’t effectively deal with gaps between desired and actual performance, because the company lacks effective problem-solving processes.

A3 Thinking is the antidote. A3 Thinking is a powerful management tool that teaches clear thinking, engages people at all levels of the organization, and increases the likelihood that any proposed changes will actually be effective. 

The class is geared toward anyone who wants to lead and manage their teams more effectively, and to those who wish to improve their own critical thinking and problem-solving skills.

Read more about the content of the class, logistics, and fees on the AME website.

NOTE:  We will be using Managing to Learn by John Shook as a textbook. You don’t need to read it in advance, but please purchase it prior to class.