Posted by: knightbird | June 25, 2015

“Lean Honors Bottom Line Over Top Line”

I have to share this quote from Karen Martin, a Lean Sensei who shared it through Twitter. I have the same beliefs but express it in a different way. I like her way. But we both seek the same results. If we dedicate our organization to a Lean Culture, we provide greater value for our customers by improving the quality of what we do and decrease the cost. We decrease the cost by Respecting our People and teaching them how to Continuously Improve what they do. This is a hard lesson for many Executives to learn.

In my Executive life, I have taken over 2 extremely dysfunctional organizations. Within a short period of time, both improved. In the first organization, I took a number of actions that intuitively improved the organization. When I learned about Lean Thinking, I backed off imposing my decisions on staff and began teaching and delegating improvement. The best results came from teaching and delegating.

In the second organization, the change was meteoric. I didn’t make decisions. Instead, I formed Executive Leadership Teams to tackle problems and issues, then started teaching them a Lean approach to problem solving. With their advice, we eliminated a $5 million budget deficit within a 4 month time frame. We saved over $100,000 on energy costs with a target of a million in savings. We filled 20 hard to fill positions in our rural health department. By the end of 4 months, we had a plan in place to generate huge additional revenues and realization of bottom line savings in the range of $20 to $30 million. We realized that the bottom line revenue gains fueled our ability to generate additional revenue.

Posted by: knightbird | June 24, 2015

Doing the Right Thing

Self interest is a powerful force. Because the human being is programmed to survive, we often do what it takes to survive. I believe it’s driven in large part by the development of our fear response starting with gestation. Let me explain this concept a little further.

Our fear response protects us from physical harm. If we are confronted by a threat, some very basic response occurs. First, the threat registers in our Limbic System-what behavioral practitioners call the fear response. Reaction is lightening fast for a reason. The Limbic System essentially acts, then tries to understand. Our prefrontal cortex is rendered impotent, for the most part. When a threat is detected, the Hypothalamic/Pituitary/Adrenal Axis (HPA Axis) fires and floods our body with Cortisol. At that time, both energy (glucose) and oxygen flow are substantial reduced for the brain. In other words, the brain sacrifices function for protection. We literally stop thinking because all of our resources are being shifted towards saving our life. The reaction is rapid and thinking will not change reaction. We will perform as nature intended, by fighting, fleeing or freezing. Restoring function to our thinking brain will require effort on our part.

We have many other protective mechanisms formed in response to the existence of what I refer to as “non-physical” threats. If you boss threatens you, it’s not a physical threat. But your threat response doesn’t know that and may escalate in reaction. What do you do? In most cases you freeze and do nothing. But you might argue back (fight) or leave (flee). The list of non physical threats is huge and you encounter them every day.

To protect yourself against nonphysical threats, you learn responses that mitigate the threat. Or, should I say, your brain learns. Lying is one response that might deflect the threat. How often do you hear “I didn’t do it” or “It’s not my fault.” Blame is another common response. It’s John or Mary’s fault.”

Another protective factor is to elevate our competencies. The Dunning-Kruger effect has us believing we are among the most competent a what we do. Any criticism is deflected by devaluing the critic. “He doesn’t know what he’s talking about” or “I am the one who does his job.” He’s worthless. We also form trust in certain people, whether they deserve that trust or not. When trust evolves into a political (mutual supportive) relationship, a lot of bad can be done.

Doing the right thing requires overcoming a lot of defenses. We justify the defense to ourselves and anyone else who will listen. How do we overcome this resistance to doing the right thing?

Dr. Deming counseled us on a method. Treat the entity you are involved in as a system. Work, play, social gatherings and other pursuits lend well to systems thinking. First, the system produces most of the errors and defects. So we need to eliminate the blame and shame that permeates most of our engagements. It really isn’t our fault most of the time. We just need to find the real explanation. And that takes a systems approach. What are the facts, ones that can be observed. We can’t rely on hearsay because hearsay is terribly unreliable in many cases. We need to eliminate penalties and evaluations, unless they are seriously a part of factual inquiry.

And we need to cultivate a scientific ability to inquire. Not by cross examination, but through collaboration and discussion. We need to understand Root Cause and the depth of inquiry achieved through asking the 5 Why’s. But we also need to know when to inquire, and when to let things go.

And finally, we need to do the right thing for the right reasons. To make things better is a right reason. If we accept responsibility for something we did that was not right, we can make it right and learn how not to do that thing again. We learn, and incorporate it into our life to make that life better If we do it the right way, we can also make a lot of other lives better. Think about it.

Posted by: knightbird | June 23, 2015

Little Victories Add Up

Many strategic planning trainers tell you to set what they refer to as “BHAG’s” or Big Hairy Audacious Goals. Dream big they say. And work hard to achieve that goal. You motivate people by these big dreams, and if they are motivated, they will work harder. I am not sure I agree with this advice any longer. I have read about the tremendous achievement of the British Cycling Team. They are winning 80% of the track races they participate in, and have become a regular on the Road Racing circuit winner’s circles. How did they get there? According to the coach that brought them there, they arrived through an “Aggregation of Marginal Gains.” By focusing on small improvements every day, they achieved the bigger goals they aspired to. And they achieved the goals they aspired to 40% faster than their big dream said they would.

The Aggregation of Marginal Gains is essentially Lean Thinking in a different context. Let’s look at the concept.

Bicycle racing requires merging multiple systems into one. The human that pedals the bicycle must be trained, fed, healed, motivated and supported through the intense effort required to be world class. As Anders Ericsson postulated, it takes 10,000 hours of purposeful effort to become world class in anything. His theory was developed in the context of human development, but the same is likely true for systems development. Most businesses put effort into getting better. But they have no theory based on science to help them. Lean is based on science, more specifically, the PDCA Cycle. Through the tools used in Lean, mistakes, defects and errors are analyzed and replaced with change that improves the results being sought. A theory of continuous improvement requires every defect to be recognized and eliminated, if possible. As you achieve great results, the opportunities for improvement become smaller. In the early days of Kaizen, especially in a truly dysfunctional organization, improvements are huge. Reducing human effort is particularly easy. Systems that require 10 people can often be run with 3. Output can increase my multiples of thousands of percent. In a highly improved system, the gains are much smaller, but just as important. Think of it this way. Once you become complacent, it’s just as easy to slip by small increments as it is to improve the same way. A culture of continuous improvements make defects the ever present enemy. You need a theory to hold on to the gains achieved. That theory is called standard work.

The British cycling team uses a bun warmer. It’s a garment that keep the butt and thigh muscles at an optimum 38 degrees celsius for optimum performance. They wash their hands to reduce illness. They have standard work for warming up before races. The choreography applied to all of their improvements requires a significant team of professionals to keep all of their cyclists on task.

Lean Leaders need the same attitude. Focus employees on improving all the time. No defect is too small to fix. Teams should work together to make sure standard work is done correctly. Science should guide you. After all, how did the British cycling team determine that 38 degrees centigrade was the proper temperature to use for great performance. And if it’s 37.6 degrees, then that becomes the standard. After all, a small gain might be the difference between a successful outcome, or not.

Give it a try.

Posted by: knightbird | June 8, 2015

Spam and Junk Mail Waste

I was reading a Metric’s Discussion from the University of Washington’s (UW) lean education reports. I know in email and healthcare, we get a lot of spam and unsolicited mailers. One job that Virginia Mason Medical Assistants (MA) take on is weeding out the waste mail so their physician does’t have to. When I arrived at Chugachmiut in 2003, we did not have an email spam filter. It doesn’t take long to pay off an email spam filter given the huge volumes of spam that are out there. If you get 100 pieces of spam a day, and it takes you 5 seconds to delete each one, you will spend almost 35 hours a year deleting spam. If you have 100 employees, that’s 3,500 hours, or almost 1 1/2 FTE’s. Mind boggling, isn’t it.

The same is true of mail. While I have a lot of lean management operational and strategic knowledge, I learn a lot from others. From this study, I now know that there are efforts to reduce waste in mail, and I have already looked them up. If a medical assistant sorts through 100 pieces of non relevant mail, you know that mail has already been handled and transported by the organization’s mail system. As a lean practitioner, if you want to understand root cause and eliminate expense, you have to figure out a method of stopping the mail from being delivered to you. Then you incur no expense in transporting or sorting it out. The MA would have that additional time to do value adding work.

In the meantime, the UW has a recycling program to deal with the thousands of pounds of waste mail it receives annually.

Curiosity is good. If we can find solutions to problems that cost us time and value, we all benefit.

Posted by: knightbird | April 16, 2015

Lean Is Slowly Creeping Into Alaska

I browsed through the category of Lean jobs at just for curiosity. I was pleased to see two of my former employers listing Lean skills in a couple of job postings. That was a surprise from one of them. I had been asked while employed there whether it was a requirement for my managers to use. The chairman of the board asked me that question. My response was that executive level managers had a choice, but they would be held to the same improvement standards as other executive level managers. He didn’t like that answer. However, I had encountered political responses to Lean before, and in my experience they could not keep up. I had been promised the freedom to select my executives, and had chosen to work with the ones I had with one exception. Then the chairman withdrew that freedom and left me with a couple of politically motivated executives.

Alaska Communication Systems is fully immersed in a Lean Implementation but it is the only private business I am aware of at the present time. I had been working with Anchorage mayoral candidate Dan Coffey on using Lean Government if he was elected. That possibility is now gone. Both remaining candidates are politicians and unlikely to understand or adopt Lean Government.

There are a couple of other listings for Lean managers, but I am not aware of anyone who understands a cultural and strategic implementation of Lean. What we generally find are CEO’s who want to delegate the responsibility to someone else. That rarely works because of heavy resistance and the lack of a systems approach to improvement. One of our Native health organizations tried Six Sigma, but that effort failed from what I can see. Six Sigma is not a culture of improvement.

I continue to talk to others, but most fail to understand how to properly introduce Lean.

Posted by: knightbird | March 28, 2015

Alaska Crime Lab Backlog

Here is a quote from a news article in Anchorage today:

“Rep. Liz Vazquez, R-Anchorage, asked Dym over and over to explain “in a sentence or two” why it takes so long for kits to get through the system and how the department is working to shorten the time.

“Two years is a long time for a victim and a case to come to justice,” Vazquez said.

Dym said he has the staff, the equipment and the space to get the kits processed more quickly. The staff has reworked its processing procedure to speed things up. The next step is figuring out how to increase the productivity of each analyst, Dym said.

He brought up the idea of hiring an outside consultant to help the department figure out a way to increase analyst productivity.

“Most certainly the backlog of the crime lab is my job to manage,” Dym said. “We have been engaging in a very methodical plan to improve it and increase capacity.”

The answer is an incredibly easy one for a Lean Practitioner-hold a Kaizen event. In one week, we can improve the process substantially. We would understand why, based on fact, that there is literally no flow. My mantra: Takt Time, Flow, Pull and Standard Work. This is straight out of Art Byrnes outstanding simplification of what happens when we look at a system.

We would start by gathering facts and data. That includes Takt Time. How many kits do we receive in a time frame and what are our requirements to process those kits on a timely basis. With experienced staff in the Kaizen, we can gather that data fairly quickly. Then we look at flow. What is the current state. We track kits through the process with time frames identified. What is actual value adding time, and what is lead time. Spaghetti diagrams are probably a great help here. When we are comfortable with the available data, we brainstorm about how to eliminate waste and reduce lead time. As most lean experts know, there is generally a small reduction in value adding time, but we can achieve huge reductions in lead time. We design experiments (PDCA) that we hope will achieve a reduction in lead time. If we do Kaizen correctly, we actually come up with 7 experiments to improve the system, and work our way through them until we have achieved improvement. After brainstorming and coming up with improvement strategies, we actually implement as many as we can right away. We rearrange the lab to achieve one piece flow. We minimize movement like walking. We bring everything we need to the lab through a Pull System in a Just In Time system.

And we create the appropriate forms to help achieve a successful defect free test every time. We maintain this result through a visual workplace that notes when a test arrives, where it is in the process, and establish an Andon for addressing problems. At the end of the week, we implement what we have because it will be incredibly better than what we started with. I wouldn’t be surprised with a 90% reduction in the time it takes to process the kit.

So why are they asking for a consultant to tell them what to do? I spoke to our new Governor when he was a candidate and just after he was inaugurated about Lean Government. I sent volumes of examples by email and wrote an opinion piece for the same paper that reported about the exchange between Representative Vazquez and staff. I sent testimony to the house finance committee about the beneficial impacts of Lean Government. I sent a similar document to House Democrat friends of mine and talked to one staff member of a prominent Anchorage house member. I have heard nothing back from any of them. Not a word. We can solve these problems. It’s actually easy from a technical lean approach. It’s a people problem, and the problem starts with the Governor and Legislative Leadership. They should pay attention to what has gone on in other  U.S. governmental entities if they truly want to solve problems and save money.

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


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.

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