Monthly Archive : April 2008
I am currently engaged in a great benchmarking and learning journey that I am taking with the Chief Financial Officer of my organization. Our challenge is a difficult one and I am looking for some of you, the readers of this blog to help me think through our strategy and approach. In return, I promise to share with you all our story over the next year.
Our goal is to redesign our financial and performance measurement systems. As the organization has adopted Lean as an enterprise/management system transformational strategy we have quickly realized that our current financial and performance measurement systems will hinder our efforts for change. The current systems primary purpose is to put controls on spending within our functions with the primary tool being the budget. We know this drives all kinds of waste and does not support our efforts to create continuous improvement within every team with year over year cost and productivity improvement.
Our goal is to develop a total cost framework for the organization that allows us to understand the primary drivers of cost. This will allow us to focus on specific drivers, prioritize opportunities and align resources to our greatest opportunities. Once the framework is created we hope to begin to transition the way we think about cost from vertical to horizontal by organizing our measurement systems around our Value Stream. Additionally, we hope this coming year to deploy cost and productivity targets through our Strategy Deployment process to each of these value streams.
As we have started our learning process we have found it very difficult to find service related examples that translate into our language let alone healthcare examples. We have read some excellent materials like the new book by Orry Fiume called Real Numbers, but are hungry for other stories, tools, examples of frameworks and materials. Please share any information if you can and wish us luck!
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This last Friday I got a chance to return to the Model Line and conduct some process walks with the senior leadership team as part of the executive training program I have discussed in several posts. The focus of the process walk was to teach the leadership team the basics of what, why and how of visual control systems. For me, it was a fun opportunity to see how far the Model Line has progressed since my last visit a couple of months back. More specifically, I was interested in seeing the leadership standard work processes that are being put in place in support of the Daily Accountability system.
Overall, I was really impressed. Over the last couple of months a three tiered accountability system has been put in place that links the front line teams to the Value Stream owners to the Vice President over the entire operation. Each tier has it own visual control system that details the standard work of the team/person, the plan vs. actual, the improvement work underway and the checking schedule for the managers.
We started the walk at the production team level in our customers service department where each team has a detailed production board in place. This is called a tier one area for our accountability system. The board shows production targets vs. actual on an hourly basis as well as the reasons why each target were missed. The board also has an improvement suggestion area as well as a detailed list of improvements under way. On the backside of the board is a checking schedule and standard work for the front line supervisors which shows their hourly standard work.
During our next stop we visited the Value Stream leaders improvement board, which is a tier two area. The board is similar to the production team, but instead of showing the plan vs. actual hour by hour it instead day by day. This board includes a section for root cause analysis as well as countermeasures in process across teams. On the back side of the board is a checking schedule for the Director including standard work for the day.
Finally, in the afternoon I got a chance to visit the VP’s visual control, which is a tier three area. The board links very nicely with the tier two board and shows plan vs. actual across all of the functions on a weekly basis. This board also has a checking schedule as well as standard work for the VP. In addition, the board has a set of A3′s identifying strategic improvement work underway across the value stream.
It was really impressive to see how much more disciplined the management system had become. It was equally as impressive to see how the visual control systems linked the layers of the organization and how they support the reduction in variation in both work processes and management processes. Each of the boards had clearly been PDCA’ed dozens of times to reflect improved thinking and demonstrated the evolution of the improvement of the management system. I wonder what will change in the next couple of months?
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Problems are gold. So the good news is that over the last six months or so as an organization we have gotten a whole lot better at making problems visible. This is a great thing, since the problems have always been there, but in the past they have often remained hidden due to a variety of reason. They have begun to become visible both as the result of processes that we have begun to change as well as changes we are beginning to make in our management system. I also believe this is a good indicator that the culture of the organization is beginning to change for the better. Slowly, over time I have watched how the transparency and openness of dialog between leaders has increased and with it the opportunity for improvement.
One of the biggest challenges we have with this heightened awareness of problems is the need for the organization to have systems, processes and capabilities that allow it to quickly solve these newly found problems. This is an area that we are not yet very good at. This has become very obvious over the last month as we have driven the checking process down through our organization to monitor our progress toward strategic targets. Every checking session we find areas where our hypothesis were incorrect and we are needing to put in place countermeasures to get us back on plan. The good news is that we know we are off plan and we need to intervene. In the past we would not have even had that level of awareness. The bad news is that our problem solving methods are non-standard, to slow, are lacking urgency and are lacking depth on the technical side. Basically, we don’t know how to swarm problems.
So, like I said in the beginning of the post: problems are gold. From a management system perspective we now have a new problem and the root cause is that as an organization we don’t know how to solve problems. So our countermeasure is simple: we will ramp up our capability through education and more importantly a whole lot of experience. We sure have a lot of problems to practice with :<)
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As we move forward with our enterprise wide transformation there are so many new skills and capabilities that we will need to teach leadership across the organization. In order to prioritize and focus this year there are two main parts of our management system that we are focusing on improving our leadership development activities. The first is to institute a rigorous check and adjust system and the second is to teach leaders new ways to drive improvement. We have deployed a plan through the Hoshin system, but being the first year we know that many of our hypothesis will turn out to be incorrect. This is exactly why we decided to focus on these two critical areas. This way leaders are able to quickly identify the problems that we know will come up through the checking process and provide teams with new ways to adjust through the learnings from the improvement capabilities.
Underneath the checking system there is a very important capability and process that we are putting in place that many organizations call Gemba walks. At Group Health we refer to them as workplace rounds. Several leaders have been conducting gemba walks with great success for the last year, but this last week our CEO and several other members of the senior leadership team began these very important workplace checks. There are many reasons why we need to put this system in place and build this capability in our leaders. First and foremost, we need to change the behavior first in order to change the beliefs and thinking. This means focusing on how leaders spend their time and in this case getting leaders to deepen their understanding of the work processes, defects, root causes by going to the place where were takes place.
As many of you know a gemba walks serve many purposes. They allow leaders to audit the standards of the strategic plan to ensure that we are on target and if not, why not. They strengthen the discipline of the management system and build accountability up, down and across the organization. Finally, they allow leaders to play the role of teachers and connect associates work to the larger picture, advance teams thinking to the next level, drive daily accountability and help identify opportunities for improvement.
At first our focus will not be on the quality of the walks. Instead we will focus on the adherence to the schedule. In other words, we will focus on getting leaders into the rhythm of doing walks on a regular basis and with a standard process. This is the best way for them to learn, because without practice there is no way to get better. Over time, if they stay the course I believe gemba walks to be one of the best way for us to begin to shift the culture of the organization. Leading with your feet instead of your mouth is the best way to get people to follow and gemba walks go right to heart and soul!
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For the last couple of years I have often felt like my team was a bottleneck. We are small group of internal Lean consultants is a very large organization. Over time with greater success and recognition so to has the demand for Lean support. Over the last six months the demand has exponentially grown as the organization has embraced an organization wide Lean transformation. It can be very frustrating to say no to someone that is asking for help, which has often been the case. In response to demand we have focused our limited Lean consulting resources around the Hoshin strategies and around transforming our management system at the top.
Recently, my thinking has changed and so to has my feeling on this mater. As we have learned more about Lean as a management system as opposed to Lean as a set of tools driven by events I have shifted away from a transformation model centered around consultants to one centered around Lean leaders. My change in view comes from the Model Line experience and what happened when one senior leader becomes a lean zealot and began to process of driving forward with a Lean management system in their area. While this VP was supported by consultants it was the leader that owned and drove the thinking and change forward. He did not rely on consultants to make the change for him, but instead pulled his leadership together and began the process of driving change with a heavy dose of PDCA. The consultants played a role, but it was not the most critical role. The real work was done by the leaders and staff in the area.
Another great example is when I first started working with Dr. Eytan the co-author of this blog. Ted bought a copy of the Toyota Way and within days we driving forward with a new set of principles with amazing outcomes. Ted has never waited for others to show him how to create change, instead he would move quickly from learning a concept to practicing its application in the work place. This is not to say Ted has never asked for consultation, which he has, but instead to say that Ted has never let the lack of a consultant slow him down a single step.
While it was important to have Lean experts in support of leadership a company also has to be aware of the risks the consultants bring to the transformation. All companies taking on a transformation will need to bring in new thinking and expertise and the consultants can play this role. Yet, if they are creating a bottleneck a company needs to step back and ask why five times. Consultants can bring new skills and thinking to the table, but they can never substitute for the learning that take place through experience. If a set of leaders are sitting on the sideline waiting for Lean consultants before they can begin to improve the company has a serious management system problem that needs to be addressed. I know of several companies, many in healthcare that have not addressed the root cause to this problem and instead have continued to hire consultants to fill their management system gap. An army of Lean consultants will never compensate for what is most needed to fuel a transformation: dedicated leaders that are willing to jump in and get started now!
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A year seems like a short period of time, but in my world it seems like an eternity for some reason. Things are moving so fast, yet, we all feel the pressure of how much faster things needs to move. Often it takes a milestone event to judge progress and yesterday I got the opportunity to attend one. Each year the management team of about eighty people of the supporting service department I am part of get together to share best practices. The theme of last years event was process improvement. Teams learned some basics from their peer early adopters and then took them back to the work place to try things out. A year ago hardly any of the teams had any Lean experience, but everyone was eager to try something new.
Yesterday we all got back together to share best practices and to learn more advanced improvement techniques. It is staggering how far many of the team have improved in just a single year. Managers from web services, Information Services, Human Resources, Software Development, Data Warehousing, Quality, etc. all shared their visual management systems, demand/capacity planning systems and Lean/agile improvement efforts. It was amazing to see. In one year the level of knowledge had grown so much higher. It was even more impressive to step back and realize that most of the improvement in process and thinking was self-initiated. In other words teams had not waited for a Lean consultant to come to town and teach them to improve their work, they had instead gone out on their own and learned through experimentation. From their own work and from others. What an incredibly powerful example of what can happen with the right mix of leadership, competition and urgency from the market place.
On my way home I took a call from the VP of oversees our Model Line work, which is in a different Division of the organization. He was calling me to share what he had learned on his Gemba walk that day. In the first set of work cells we put in place a year ago in his largest production area a new process had been created by the teams for daily improvement. Staff with improvement ideas submit a proposal to test a new idea during the morning huddle through a standard process. The team leaders then work with the person that submitted the idea to structure an experiment to test the idea that day with the hope of bringing the results back to the team the following morning to share in the huddle and if successful for adoption by the entire team. The process had created quite a buzz across the teams and was a positive surprise to the VP. The teams had not asked senior leaders to help figure this out or for permission. They had done it on their own! I can’t tell you how different this is from the norm. A year ago when we put those work cells in place this would never had happened. I love it. What a difference a year can make, I just cant wait to see what I find next year!
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In a silo-ed and function driven organization managers tend to think about problems and solutions through a vertical view of the world. Anyone in healthcare should know exactly what I mean, because I have not been to a healthcare organization that does not fit this profile. This view introduces all kinds of problems that I could spend months of blog postings talking about. At the forefront of my mind right now are the challenges this view brings to an organization that is working hard to solve very large and important problems with high stakes if the results don’t follow. More specifically, with a vertical view you tend to try and solve symptoms of the problem. Rather then understanding the cause and effect thinking that comes with the process view of the world leaders tend to jump to the solution, which very often involves changing structure first.
Recently myself and my colleagues are working very hard with leaders throughout our organization to teach them to see and think process. It we want to lead the organization toward improved results we need to change the thinking first. One of the most important ways to change this thinking is through a process view. It is often funny to watch the look on people’s face when we introduce the concept that “everything is a process.” Yet, once leaders begin to see and think process it can be enlightening to them. What seems simple can be very powerful. A process view leads to not only a much better understanding of where the root causes are, but it also allows them to see a different set of means to test and solve for them. Additionally, process thinking allows the members (customer) voice to be easily translated into everyone’s work. Which brings meaning to the mundane and allows staff to rally around a cause far more important then doing the job. A big challenge will be how quickly we can teach the organization to adopt this new and improved view of the world!
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