Posted by: knightbird | March 21, 2015

Failure, And Learning From It

“I have failed? What can I learn from it?” There, I just admitted failure (imagined at this point, but really I have). If I am in the wrong organization, I have opened myself up to immediate and long lasting criticism. When promotion opportunities come up, someone inevitably says, “Remember when….” And I am quickly removed from consideration. It does not matter that I have learned and improved the reason I failed. It doesn’t matter that I made a breakthrough that led to increased profitability.

Professor Amy Edmondson wrote an excellent article in the Harvard Business Review (April, 2011) discussing how we can learn from failure. And her first point is about eliminating blame (and, I might add, it’s first cousin shame.) Dr. Edmondson has a number of excellent comments, and my suggestion is to read the article.

One obvious point she makes is that not all failures are created equal. And in my experience, when you make a mistake, the consequences can vary for the same mistake occurring in differing circumstances. If you run a red light in your car when there is no traffic, you just made a mistake. Make the same mistake when a cement truck is coming through the intersection, and maybe you made a fatal mistake. The same behavior can lead to different consequences. Most of the time when you run a red light, there isn’t a cop in view and you don’t even get a ticket. I imagine you see, as I do, many drivers running red lights. The same is true for speeding. Without consequences, we gain a feeling of comfort.

Professor Edmondson suggests ways to build a learning organization and provides a few Lean Thinking stories. She mentions Alan Mulally’s request for his managers after he took over Ford Motor. He wanted their reports to highlight problems with green, yellow and red colors. Of course all of the reports came back green. We have all learned our lessons well. In school, a red mark was a really bad thing that controlled our future. We have been exposed to a harsh, blaming culture from the cradle.

And Toyota is mentioned in the article, of course. They have the best system ever developed for calling attention to errors—a culture of science.

“Another is the vaunted Toyota Production System, which builds continual learning from tiny failures (small process deviations) into its approach to improvement. As most students of operations know well, a team member on a Toyota assembly line who spots a problem or even a potential problem is encouraged to pull a rope called the andon (sic) cord, which immediately initiates a diagnostic and problem-solving process. Production continues unimpeded if the problem can be remedied in less than a minute. Otherwise, production is halted—despite the loss of revenue entailed—until the failure is understood and resolved.”

About midway in the article, we are introduced to root cause analysis. Lean Practitioners are very knowledgeable about Root Cause Analysis. It is my mantra. Ask the 5 Why’s? Dig deep. Use the tools of Lean to find the facts that we can analyze and identify possible countermeasures. Find 7 different solutions to every problem and rank them. Try the first one and check to see if it produces the results you hope for. If not, try the second and third if necessary.

Dr. Edmondson advocates building a learning organization and offers some good tools. My only criticism is that she didn’t put it all together and recognize that Lean Thinking already does what she is offering. For example, she segregates TQM out as a good practice, but doesn’t mention (or realize) that TQM was build on Toyota practices.

Her final advice in the article is this piece in response to her conclusion that “an understanding response to failures will simply create a lax work environment in which mistakes multiply.”

“This common worry should be replaced by a new paradigm—one that recognizes the inevitability of failure in today’s complex work organizations. Those that catch, correct, and learn from failure before others do will succeed. Those that wallow in the blame game will not.”

Lean Thinking done properly does not have this problem. A culture that accepts mistakes, defects and errors with an improvement response will not allow a lax work environment to exist. If it’s a true culture, any recognized mistake activates the improvement response—and the problem is resolved.

Posted by: knightbird | March 20, 2015

A Strategic Direction for Alaska

At a lunch conversation with some Alaska business leaders, I tried to explain my vision for making Alaska competitive. Of course it involved adoption Lean Thinking. I have examined issues that are being discussed about our state’s income issue, crime, housing, education and business development through a Lean Thinking lens. Some issues I can’t resolve, but I park them in a treasure chest because I believe we can put Alaska in a posture to discuss those issues (mainly revenue related) in a civil environment.

My first Vision is that of a very efficient state government addressing critical issues with Lean Government. With 24,000 people employed by the state of Alaska, We should be able to achieve about $500 million in savings without diminishing program effectiveness. It’s only a matter of time before we get a gubernatorial candidate who has the leadership to advocate for the change. Many governors and mayors in the Lower 48 have pressed forward with good success. Of course they have their detractors. Tough. There are detractors for everything, and we need to find a governor with the ability to understand the powerful impact Lean Thinking can have on our finances. Our state services are riddled with waste.

If our state utilizes Lean Government, then our political subdivisions should follow suit. While our education budget debates focus on teachers and professors, the plain fact is that we have more support staff in the Anchorage School District than we do teaching staff. And our teaching staff is burdened by many wasteful requirements. The University of Washington has adopted Lean Education with considerable success. At one conference, they represented achieving $85 million in savings. That means for every year they operate, they aren’t spending $85 million. That’s how Lean Thinking works. When you eliminate waste, you eliminate the cost of that waste.

Local governments can effective utilize Lean Government as well. Denver, CO and King County, WA are just two examples. One explanation I offered to the business leaders about why immediate cost savings can’t be realized in the budget is this: most government services claim to be underfunded by at least 20%. As they improve, the need to get a handle on both the backlog they have and the work that isn’t being taken on. Employees have work left undone because of the requirements for reporting and inquiries by politicians. It’s pretty standard for the public to complain when they don’t get good service. That leads to an inquiry by politicians and orders to get it done. I maintain that political interference leads to a less stable system with greater variation. And politicians demand reports that have no literal value.

Once the unfinished work and backlog are caught up, there is a lot of kaizen still needed to improve the system as a whole. But with improving services come amazing opportunities to actually meet customer demands. As complaints decline and services improve, the benefits expected for those services should help customers become more effective and efficient. Think about the process for securing building permits or driver licenses. Less time spent in line means more time for other tasks. One byproduct of eliminating waste is gaining an ability to see solutions for problems rather than just putting out fires caused by bad processes. IF the service is truly necessary and worthwhile, this period of time will allow for focusing on resolving the problems associated with the service. This is a prime reason why we cannot take jobs from the improving organization. If they have excess employee capacity, we can assign that capacity to improvement events in other parts of the whole organization. If there is a resignation, retirement or disciplinary termination, we can eliminate the position and take the savings.

So we end up with a more productive government, and more effective educational institutions—secondary and post secondary. If our faculty starts learning how to find and address root causes of problems—practical applied research, then maybe we increase our quality of life through behavioral Never Events. Reducing domestic violence, rape, crime in general, depression, alcohol abuse and other common issues might become a true focus.

The third part of the vision involves savings that come from solving problems, or recognizing “Never Events.” Think of a Never Event this way, it the Event happens, it will cost us. If it doesn’t happen, it will not cost us. Medical care is a great place to explain this. If a medical error never happens, the patient does not suffer, staff does not have to invest in cleaning up after the error, and everyone wins. Washington State’s investment in addressing developmental trauma allowed for $52 million in savings from Never Events. Teens didn’t drop out of school, go to jail, draw welfare and became tax-paying residents. That’s a great Never Event, and if replicated biannually (their budget cycle), generates considerable savings. If Alaska can encourage Never Events for its juvenile and criminal justice systems, we have huge savings potential.

I believe some intangibles will result from government action. Our communities will become better places to live. If our public utilities become more efficient, we will have fewer outages and lowered costs. With savings, perhaps our politicians will invest in recreation and amenities that increase satisfaction. I have advocated for the use of Predictive Policing in Anchorage. Imagine the satisfaction if we can reduce incidences of crime by as much as 20%. Insurance costs could go down. Satisfaction could go up.

The fourth part of my vision has our business community adopting Lean Thinking rapidly. If the University of Alaska and Alaska Pacific University add Lean Management to its core business curriculum, we can train a generation of leaders who will move away from the tired old management practices that have cost us so much in employment because we can’t compete with Lean businesses. For example, one homebuilder in Texas is able to complete a new home in 30 days. We could actually bring down the price of housing and make it more affordable for Alaskans with Lean Construction.

The fifth part of my vision engages Lean Healthcare and true prevention for an eventual reduction of as much as 50% of the costs of health care. Imagine the possibilities. If health care costs go down, then businesses become more competitive. I truly believe this is possible. It’s a realistic vision.

Maybe we end up like Finland, with a well-educated workforce capable of world-class competitiveness. Or like Denmark with businesses like Lego.

Now we just need a starting point. That’s what I have been working towards. At this years Alaska State Chamber conference in Fairbanks, we have an opportunity to start educating Alaska’s business leadership. It’s a start. But when I sponsored and put together Alaska’s only Lean Healthcare conference in 2007, I had really high hopes that the message would resonate. It did not. It’s now 8 years later, and I am still hoping that the spark with light a fire.

Posted by: knightbird | March 19, 2015

Wasting Opportunities for True Change

Nelson and Winter developed a unique theory of change in their book An Evolutionary Theory of Economic Change. Organizational behavior is dependent on a host of negotiated “routines” among employees at different power levels and social strata. A well liked employee who is sociable and well-connected fare well in this environment. Toxic leaders also fare well until a crisis exposes the routines as inadequate to meet the needs of the organization. When this happens, the organization has a perfect opportunity to change the routines. Leadership must step in and alter as many routines as is feasible. It takes a focused, concentrated effort, and even then, only the critical offending routines are likely to be changed. It’s definitely not a Lean Thinking approach, but it does achieve measurable results, depending on the leader.

This story comes from “The Power of Habit” by Charles Duhigg. An 86-year-old patient came to the Rhode Island Hospital (RIH) Emergency Room (ER), the only Level 1 trauma center in Southeastern New England. It had a great reputation as a teaching hospital for Brown University and innovation in a number of areas. A head scan revealed a subdural hematoma within the left portion of the patient’s cranium. ER paged the Neurosurgeon on duty to review and he recommended immediate surgery. When he finished the procedure he was in, they had the patient prepared for surgery. The surgeon rebuffed a nurse who alerted him to an absence of information about the surgery site on the patient consent form. The surgeon proceeded to open the wrong side of the patient’s skull. A 1-hour surgery turned into 2 hours, and the patient died 2 weeks later.

According to some nursing staff, RIH was referred to as a “Glass Factory ” because it could come crashing down at any time. RIH was filled with dangerous routines and a corrosive culture. Nurses communicated about Doctors with different colors to communicate Doctor arrogance. “Blue meant ‘nice,’ red meant ‘jerk,’ and black meant, ‘whatever you do, don’t contradict them or they’ll’’ take your head off.’”

The toxic nature of the organization was revealed as it sank into a period of medical errors so severe that one nurse said:

“’It felt like working in a war zone,’ a nurse told me. ‘There were TV reporters ambushing doctors as they walked to their cars. One little boy asked me to make sure the doctor wouldn’t accidentally cut off his arm during surgery. If felt like everything was out of control.’”

Imagine hearing a young boy ask you not to let a doctor cut off your arm during surgery. The boy was obviously traumatized above the level he would have just going into surgery. This was recognized as a perfect opportunity for change, and change did happen. It just wasn’t Lean Change.

I have seen many crises among our Alaska Native corporations. It’s the nature of how they were born. Crises have led to some change, but not enough. We currently rely on special treatment from the federal government through it’s minority business programs, a category of shared earnings referred to as 7(i) income and savings accounts that generate significant amounts of earnings. Operational profits are slim for most. My regional corporation went through a significant period of losses in operations fueled by huge losses in one of our subsidiaries. Did this provide an opportunity for change? Yes. Did it provide change? Yes. Was it enough change? Not in my opinion.

When Nelson and Winter talk about the power of “routines,” it resonated with me. When faced with crisis, the first thought is to replace leadership. That happened. The second through was to divest nonperforming businesses. That is happening. The third thought is to buy great performing businesses. That is in process.

I argued for a different type of change, as I have for the past 10 years. Let’s adopt Lean Thinking. I have shared lots of information with our management and board over the past 10 years. Lean organizations blow their non-lean competition away. More cash is generated and expansion is quicker. I talk about lost opportunity cost and explain how it hurts us. If we lose $30 million in cash, that’s cash we don’t have for expansion or shareholder benefits. If we waste $30 million through inefficient operations, that’s cash we could have used for expansion. If we have both, we waste a collective $60 million that could be invested for future returns. If we achieve a 10% rate of return, we effectively waste $6 million in revenue the first year. If nothing changes, then over 10 years, we have wasted $60 million at a minimum.

That’s the routine we are in. How can we break it? Not only here, but also in my state—you know, the one with the fiscal crisis. At the state level, our routines revolve around increasing revenue from the oil industry and cutting budgets. We do both based on relationships and routines. My argument has been to follow the lead of a number of states, the US military and some federal government programs. Let’s adopt Lean Government as our management system.

The crisis in the state of Alaska also provides more than just an opportunity to lead a change to Lean Government. I estimate that an effective Lean Government implementation can produce at least half a billion dollars in value while retaining the effectiveness of existing programs. Now I am not advocating that we cut half a billion dollars worth of employees. That’s not how Lean works. I have written about keeping employees many times. But there are many opportunities available for cutting costs while respecting the employment of our staff.

Effectively implementing Lean Government could impact the private sector in our state in many other ways. By extending the Lean practice to our municipalities, school districts and the University of Alaska, we could save many more resources and still provide the same or increased benefit. And imagine the potential if we could influence our health care systems to implement effective Lean Healthcare. By driving down the cost of healthcare, we could impact every business in Alaska and make them more competitive against the rest of the country. After all, sending patients from Alaska to Seattle has actually been proposed as a response to our fiscal issues.

And finally, imagine if our businesses adopted Lean Thinking. Perhaps we could become more competitive worldwide and actually expand our economy. When I think of how Lego is a huge driver of the Danish economy, I salivate.

Nelson and Winter had a great point when they exposed the routine that exists within organizations. How do we challenge those routines and effect positive change? I am running out of ideas, so I just keep plugging away. Perhaps one day, there will be a leader who steps forward and is not stopped by the political routines that exist in our state.

Posted by: knightbird | March 16, 2015

I HAVE FAILED—AGAIN AND AGAIN

In 2004, I introduced Lean Management and Lean Healthcare to a small, rural Alaska nonprofit with great success. Improvements were documented and I presented the proofs numerous times to health care executives and leaders in Alaska. I failed to convince them of the incredible benefits that accrue to patients through adoption of Lean Healthcare. In 2007, I cosponsored the first and only Lean Healthcare Conference in Alaska, with the Alaska Primary Care Association. I wrote letters to and attempted to engage the Alaska Native Health Board, the Alaska Native Tribal Health Consortium, the National Indian Health Board, the State of Alaska Healthcare Commission, the State of Alaska Department of Health and Social Services, the Indian Health Service and Maniilaq Association’s board of directors. I failed, and patients continue to suffer.

As I write this, I am very mindful of the enormity of the task I have undertaken. Perhaps I am obsessed with this change occurring in Indian Country. I have three relatives that I loved dearly who died prematurely because of medical issues. And I know many more who have suffered at the hands of a medical care delivery system full of flaws, errors and defects. I find very protective behaviors when I speak about the flawed health care system. I am constantly challenged. Yet the facts speak for themselves. And the facts are themselves flawed because of the collegial nature medical errors are discussed, the hiding behaviors that occur in systems that are punitive for the employees engaged in healthcare and the bullying behaviors from those that are in charge—from boards of directors, CEO’s and executive level management.

And I will fail to convince most of you. I can document extremely beneficial levels of improvement that accrue from using Lean Healthcare in the right way. I listen time and again to patients who believe they are not well served by the system. I listen to leaders who continually ask the federal government for more money and technical assistance on all kinds of issues that could be addressed through Lean Healthcare. By reducing the incredible amounts of waste in the Indian Health Care funded systems, we could be delivering far more health care than is currently provided. How do I know that? Because patient services increase in systems that use Lean management techniques. The Clearview Cancer Center managed a 45% increase in patients served after it used Lean tools to change its management of cancer patients. They did have to hire more nurses, but all other employee categories remained static. Virginia Mason handled 1400 more patients annually in its redesigned cancer clinic. I saw an ability to serve almost 230% more patients annually at my last CEO assignment, with no new employee requirements.

I will fail again. I will fail to achieve my goals of a Lean managed Indian Healthcare System with most of you. You will not be persuaded about the incredible potential we have. But I am not disheartened by failure any longer. I learn through every failure what I must do in order to help patients receive the care they deserve. Lean Thinking taught me that failure is required in order to learn and advance. That, and a burning platform, will help us move forward.

Posted by: knightbird | March 13, 2015

Another Root Cause Analysis

I attended what was billed as a mayoral forum at the University of Alaska’s Wendy Williamson Auditorium. The topic of the forum addressed the increase in violence in Anchorage. The moderator had a lot of canned questions to ask, and the audience had a chance to participate in the last 30 minutes of the forum.

I did not hear any innovative ideas, and some really dumb ones did emerge. I did ask a question about whether any of the candidates had ever heard about “Predictive Policing”—something I believe is a very Lean approach to policing. The FBI issued a law enforcement bulletin in April of 2013 describing the concept and its early success. Only one candidate’s answer expressed understanding. One candidate (who should not be running, in my opinion) said that there were privacy issues with the concept. The one decent answer said that the Anchorage Police Department was aware of the concept, but not with the specific phrase. He said that APD gathered data, but did not have the expertise to use it.

Being a knee jerk Lean Guy, I had to reduce the questions asked down to a search for the root cause of violence. Every candidate jumped to an immediate, we need more cops on the street. Not one of them said we should help cops become more efficient. No Kaizen has been conducted in Anchorage on police issues. That would be my first comment. I don’t know the facts about crime in Anchorage, or how the internal processes of policing address them. So the first goal is to understand the facts. One question asked the candidates to consider whether burglary is linked to drug use and how we address this subset of crime.

That’s a good question. Why does a burglar steal? Answer: to get money to buy drugs. Why does the burglar need the money to buy drugs? Answer: because the burglar is an addict and needs the money to buy drugs. Why does the burglar have a drug habit? Here is where the question becomes more difficult to answer. A couple of the mayoral candidates did talk about historical and intergenerational trauma, but not in any depth nor with any sense of understanding. One answer might be: the burglar is a drug addict as a result of the impact of intergenerational trauma?

If we arrive at this point in our question and answer exercise, the proposed solutions begin to change. We now begin to understand the link between burglary and drug addiction. We can capture and incarcerate the perpetrator, but the crime will only return when the perpetrator is released, unless we deal with trying to find solutions for the drug addiction (or whatever else might be the cause for the crime)

This exercise is incomplete, and a holistic solution to crime needs to follow a progression of Kaizen. We need to fix processes and reduce defects. The more time cops have to spend doing their job, and the less time wasted, the more protection we have. Lean can fix this part of policing and probably reduce the number of cops needed. Then solutions like Predictive Policing can be tried. In some places in the country, Predictive Policing has reduced a category of crime by as much as 20%. That is significant. And it can be used in any crime that has enough data points. For homicide and domestic violence, the spontaneous nature of the crime renders Predictive Policing ineffective. But I am sure a few good Kaizen and a continuous improvement mentality can help continue to reduce crime. Then we can start to work on preventing the crime.

Posted by: knightbird | March 11, 2015

Stanford Identification of 10 Best Practices

Whenever I read “Best Practices” reports, I check to see if Lean is mentioned as a source of best practices. I guess I automatically do a root cause analysis as a maker about whether to accept the report. I know that there is always some validity in reading documents from respected research institutions like Stanford, but this one left me frustrated. A recitation of outcomes does not explain how the best practices came to be. Let me explain by examining one of the examples.

Banner Health Clinic Internal Medicine of Phoenix was identified as a high performer of the 10 best practices. Banner has also been a Lean Healthcare practitioner since at least 2009, or 6 years. Here is the list of the 10 best practices that emerged:

  1. Easily accessible
  2. Tests and treatments chosen wisely
  3. Feedback encouraged
  4. Tests and procedures not outsourced
  5. Referrals made with care and monitoring
  6. Follow-up appointments and meds checked
  7. Providers work at the top of their licenses
  8. Collaboration prevalent
  9. Pay based on performance
  10. Invests in people rather than space and equipment

An effective implementation of Lean Healthcare produces all of the results listed, and then some. Lean Healthcare’s “Respect for People” pillar is in full view. But you cannot just say to staff to become more easily accessible, for example. But through Lean Healthcare, you can examine the facts about your practice and through respecting your patient, improve patient flow like Virginia Mason Medical Center did, as a system and not one area of focus.

There are a number of value streams that impact the 10 practices that have to be coordinated in order to become great at what you do. Patient Flow is important, and that is one value stream that VMMC improved considerably. A team consisting of an MD, an RN and an MA work collaboratively to facilitate patient flow. Using only one exam room, an MD sees about 26 patients per day on average. A patient checks in and is roomed by the MA almost immediately. We were told that if the waiting room has more than 5 patients, the clinic manager is alerted and the source of the wait found and corrected. The MA has prepped the MD, and after their work is complete, the MD enters the room.

VMMC developed a unique system for “mining” their information streams in order to consolidate patient visit needs. If a patient needs a mammogram, the system notes the need and it is brought to the attention of the patient. VMMC’s information system is so good that it projected that 3 lives would be saved through early detection. Other tests are consolidated into the patient visit, which saves patient time and effort.

While the MD is with the patient, the MA is prepping important work for the MD to do during the short time between patient visits. When the MD exits the room, they chart the visit and address 2 to 3 vital tasks directly related to patient care—lab results, expert consults and patient contact. The RN takes care of education and care coordination requirements.

Item 5 is interesting. VMMC developed a back care system for Starbucks. Before examining the system, it too 6 weeks for a patient to get an appointment, and an MRI was almost always included as a part of the treatment requirements. After assessing the system and gathering the facts, VMMC found that 95% of patients could return to work the same day. They had a same day appointment with a Provider and Physical Therapist. After ruling out a serious case requiring an MRI, the patient received an average of 4 PT sessions.

Other value streams are involved, including labs and testing. Charting and the EHR are important as well. Taking a systems view, instead of a best practices view, can have a profound impact on healthcare.

My point is that all Stanford has focused on is the results for a lot of hard work. The root cause of the best practices needs to be pointed out. All managers will find from this report are the practices and attempt to require them from staff. Command and Control. The real improvements come from training your staff in Lean and helping it become your culture.

Think differently. Think Lean. No excuses.

http://www.petersonhealthcare.org/sites/default/files/images/media_library/Peterson%20Center%20on%20Healthcare_Stanford%20Executive%20Summary.pdf

Posted by: knightbird | March 5, 2015

Higher Education in Alaska is Not Lean

This is a recent quote from a long time higher education leader in Alaska.

“The university is an economic engine for Alaska. Our research is conducted across the state, providing jobs, vital insights and information needed by industries.”

My question is—why hasn’t the University discovered the power of Lean Thinking and championed its adoption by state and local government, Alaska business and education, including itself?

Posted by: knightbird | March 4, 2015

Positive Lean Environment Impacts

The United States Environmental Protection Agency produced an agency report that won a 2003 Shingo Prize for recognizing that regular lean improvements have ancillary benefit for reducing environmental impacts.[i] If we define waste as a traditional Lean Practitioner does, it is any action in our processes that do not provide value to our customer. Excess waste does not provide value, and in fact require expense to dispose of. And if disposed of improperly, the waste is detrimental to society—a cost that the business creating the waste does not bear.

This concern was identified as an important one by a Japanese Lean Sensei: “Emissions to air and water, as well as the generation of solid/hazardous waste, represent a waste of production (that is, no value to the customer), just as surely as the need for protective equipment (such as gloves and ear plugs) is, and that eventually lean would address them.”[ii]

The good news from the EPA Report is that Lean implementation helps reduce environmental waste as a byproduct of Kaizen. When we start to target environmental waste through Kaizen, the benefits should multiply.

[i] U.S. Environmental Protection Agency. “Lean Manufacturing and the Environment: Research on Advanced Manufacturing Systems and the Environment and Recommendations for Leveraging Better Environmental Performance.” October 2003. Online Report. 06 October 2005. <http://www.epa.gov/lean/leanreport.pdf&gt;.

[ii] Mitch Kidwell,Lean Manufacturing and the Environment: Ignoring the 8th Deadly Waste leaves money on the table.” Target Magazine, Volume 22, Number 6, Sixth Issue 2006.

Posted by: knightbird | March 1, 2015

Heavily Invested in the System Failures, or Gatekeeping

My colleague, in describing employees who are resistant to a Lean Implementation, refers to them as invested in failure. He means that they benefit from working in a bad system because they have figured out self-promotion in the face of adversity. Something bad happens, the know how to benefit from it. Virginia Mason Medical Center has referred to them as “Capes.” They wear figurative Capes, like Mighty Mouse does (don’t know about Mighty Mouse—look him up on Google), as they sing, “Here I come to save the day.” I call them politicians, based on my analysis of control charts, common and special cause, because politicians gain support based on addressing common cause in a system.

Adopting Lean Thinking is a proactive, offensive strategy to change an organization. It is not common sense. As Taiichi Ohno said, “common sense is always wrong.” It takes leadership, vision and a willingness to accept the premise that problems are good. And another saying that is repeated frequently in a Lean assessment, No problems is problem.”

When you add this investment in failure with gatekeeping, you have a heavily resistant employee who you need to redirect. We already understand from behavioral research about resistance to change. As we are immersed in our culture of work, we learn habits through repetition. We also learn duck and keep our heads down in the workplace. Too much visibility can invite blame. We learn how to deflect blame and hide from it. Dilbert entertains me because of the constant gatekeeping and deflecting of blame, almost always in Dilbert’s direction.

Here is a quote I truly believe in:

“Get the right people on the bus and the wrong people off the bus.”

Jim Collins, Good to Great

Some employees are truly destructive to an organization. I hate to admit this, but I found it to be true. I have also discovered that they will choose to leave if you are successful with a Lean Implementation. When their work results become measureable, the spotlight of failure is too acute for them to endure—and they leave. And the usually have enough traditional achievements (buzzword achievements that traditional workplaces love), finding a new job is not that difficult. Be thankful for that.

If the gatekeeper is not very marketable, you are left with a difficult choice. Do you attempt to turn the employee to the light, or do you let them go? I have made both decisions. Sometimes turning the employee doesn’t work and they get more disgruntled as others start to improve radically. They begrudgingly go along and talk the talk. But there is no walking the walk. They refuse to engage with the Gemba. I had one employee do multiple Google searches looking for dirt on me. They attack behind the scene, bad mouth you to everyone that will lesson and try to enlist other employees in their attack.

I experienced this type of attack from a group of employees all working in the same system but in different places. As I introduced Lean, and their jobs improved, a number of them left, but an equal number stayed. Before long, our systems improvements and training made this group into one of the most respected in the state. For years, one of them would receive one of two awards given annually from among over 500 similar employees in the state. We had 11 in this group. They received one of the 2 prestigious every year for a few years in a row. They didn’t receive this award in prior years. Lean was the only intervening change.

Letting employees go can help with a Lean Transformation. But it also creates fear in the organization about becoming the next one to be let go. You need to communicate with employees and let them know what you are doing, and why you believe it will be successful.

I am still conflicted about how to handle Capes and Gatekeepers. They are generally very good, adaptive employees who could be very successful in a Lean Implementation. And if you can turn them to the light, they inspire others. The favor they gain by helping other employees navigate the system can pay dividends when those other employees see the change in their Cape.

There is no easy answer. There is a good answer on the hiring side. You hire to a Lean Culture. You get buy in before the employee is hired. If you have them make a commitment to Lean before they are hired, you can have a conversation about their commitment if they don’t follow through.

Posted by: knightbird | March 1, 2015

Resource Leveling and Budget Experts

I have been frustrated by “Budget Experts” in any organization. They put budgets together, manipulate the budgets when they don’t accomplish what they projected and they control the budget by command. And the games that are played are complex and imaginative. I have thought about his example based on a conversation with my closest colleague. It incorporates a lean view of an organization but is a fictional scenario.

Waste elimination is based on learning to see waste. It’s like any other skill—it can be learned. The infamous Ohno Circle is an example of learning to see, but it worked. You learn to watch and think for yourself. I talk to my colleague about things like this because learning is a collaborative opportunity. We both learn from each other and teach each other. When you understand what waste is, and you can see waste, you are on the way to learning to see. Here is what I see.

Most processes that are not continuously improving (I call them Random and Chaotic—R&S) have incredible amounts of waste in them. But Budget Experts cannot see the waste because they are too focused on the processes involved in preparing and analyzing budgets. A Planner first estimates the number of employees that a budgeted entity needs to accomplish their mission. I assume that the planner says we need 13 employees for an R&C system. The Budget Expert says you have to make do with 10. Each employee will then need both direct and indirect support. For direct support, include all of their benefits, office, computer & supporting machines, Internet, travel and maintenance, software, telephone and any other required work implement. Indirect services include HR, Finance, IT, supervision and any other commonly provided support such as a motor pool (usually supported within the direct budget but requiring Indirect Support as well). So here is what we end up with planned for the system: 13 Employees, 3 in red not allocated.

13Employees

Now we need to get work done with an R&S System. Assuming every employee is equally productive, we have 87% of the resources requested, and should be able to achieve 87% of the work done.

Now we apply Lean thinking to the work we are doing by Kaizen. If we increase productivity by 20% (x 87%=17.4), we now have capacity for 104% of the original planned work. In essence, assuming the planners were correct, we have absorbed the deficit caused because 3 employees weren’t budgeted for. We should be able to accomplish all of the work left undone—the backlog. Over time, we have 4% of our capacity to whittle down the 13% that couldn’t be done, unless we paid for overtime. A 20% improvement is achievable. Many Kaizen can achieve 50% improvement.

At this point, a Budget Expert will say lean is not working. We are not saving any money. This example explains why. If you want to do the job right and have been given insufficient resources, of course you aren’t saving money. All you have done is achieve expected output with fewer resources than originally forecast. You have achieved the output originally attributed to 13 employees with 10, and have an additional 4% capacity to start eliminating the backlog. Of course, you need to figure that improvement events will take time, but assume that we have made up the time through using the 4% capacity prior to eliminating the backlog. We were just ignoring the backlog anyway because we did not have the resources to do the work initially.

Now lets say we achieve another 20% improvement. We now have 24% extra capacity and any backlog will be eliminated rapidly. If we contract services out, we can now bring those services back in house for additional savings. And we can use the capacity for even more improvement events. In fact, we have done so well, we can loan experience employees out to other improvement events in other departments for even more achievement. Or we can detail the extra capacity to a Kaizen Promotion office to help improvement happen throughout the entire organization.

Here is where my colleague helped me achieve more insight. When we have absorbed any backlog, and created capacity, at some point in time we need to remove that capacity from the department. It serves no purpose there. But staff within the department is extremely valuable. They understand your system of improvement and are trained to continuously improve their workplace. They know what standard work is, and the likelihood is that they are becoming increasing more satisfied with their workplace. We can level our resources by assigning employees to other positions that are needed. We retrain and cross train employees to be even more valuable than when they first started. It’s a winning strategy.

A primary strategy for any organization implementing lean and wanting to retain its employees will be the elimination of non-personnel waste. If 2 employees are reassigned in the example above, 20% of direct support is eliminated from that department along with the 20% cost for staffing. The direct support will follow the staff to their new assignments. But we will be meeting the needs of 2 departments with fewer resources. But we are able to level our resources to achieve greater results throughout the entire organization. Now we are thinking as a system.

Part of thinking as a system is to realize that in addition to improving employee output, we are also reducing other inputs into our services or products. We need less space, very small amounts of inventory, fewer pieces of equipment and other costs related to occupancy and indirect. We can prefer employees to spending on other tangibles. By making this commitment to our employees, we build in loyalty to our Lean Implementation and the organization.

Assuming we are not growing our business, at some point in time, we will have achieved a significant level of improvement and have a real need to reduce staff. We can implement the final stage of the 6 strategies I have been discussing. As employees retire, resign or terminated for valid cause, we don’t need to replace them. We can realize the cost savings as we have achieved systemic improvement and eliminated substantial amounts of waste.

Budget Experts understand very little of what I am writing about. You can see it in our current state administration’s approach to their income crisis. They have announced a small layoff of slightly more than 300 employees, many of them currently vacant. The Commonwealth North’s Fiscal Policy Study displays absolutely none of this insight. It focuses on the wrong issues. And when you read about the response from many other state income dependents like municipalities and school districts, they respond in the same way—negatively. If, instead, our state administration recognized the value of our state employees, and adopted a Lean Government approach, perhaps we would have a different response. If we could achieve the same 40% improvement I wrote about in the fictional department I created, then 24,000 employees eventually become 16,800 employees. Services don’t decline and our budget eventually realizes the savings. What a difference approach makes.

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