Daily Kaizen

Since this will be my last post in 2009 I thought I would take the opportunity to use this entry as a reflection of the year.  It goes without saying that everything I write is my opinion and up for debate. 

Overall, 2009 was the best year I have had professionally.  I spent the entire year of 2008 working with our executive leadership team to put in place a Strategy Deployment system.  While 2008 was a fun year where we made a lot of progress, by the end of the year I felt very disconnected from where valued added work take place.  I was ready for something new and more concrete. 

Luckily, exactly a year ago today my boss asked me to join with our Primary Care leadership team and help them spread the Medical Home Model across 1800 people and 26 locations. While we are far short of being able to declare victory it has been a remarkable year.  Our focus has been on putting in place the foundation of the Lean Management system including standard work, management standard work, visual management and basic problem solving.  The rate of change has often been overwhelming, and there have been countless late nights and weekends, but the people have made it all worth the investment.  I never have worked with a group that was so willing to jump into the unknown with a good attitude and a focus on the customer.  It was amazing.  Often it has been easy to get caught up in the challenges of the change, but just as often I think everyone got the sense that the work we are doing and what we are learning has far greater meaning and purpose then what is happening at Group Health alone. All the elements of successful transformational change were coming together at the same time.  Personally, this has been a very important growth opportunity for me to learn new skills through trial and error and I am very thankful for the assignment.

At the organizational level 2009 has been a very challenging year.  When you talk to experienced Lean folks they often talk about forks in the road during their Lean journeys.  Times when leadership needs to make very hard decisions to either stay the course or go back to what has worked in the past, at least for the short-term.  For our senior leadership team we had one of those years.  While the long-term outlook is very encouraging we have had very serious short-term cost challenges.  There has been a huge amount of pressure on the senior leadership team to cut cost in the short-term which in the past would mean only one thing: laying people off.  I am proud of this team, because they did not go down this path.  They did the right thing. They had to make some hard decisions, but laying people off was not one of them.  We all need work hard to help them confirm in 2010 that this was absolutely right path to follow.

I thought I would end this posting with a story about a Lean event I participated in last week.  I walked away from this event completely jazzed, because it was the first time I was able to see just how powerful a Lean system is becoming for this organization and it foreshadowed for me what is possible in 2010.  During the event we brought together four departments that span our enterprise.  The goal of the event was to design systems to allow us to effectively “onboard” new patients to our system.  This event marked the first time that we brought together a set of functions that have all been deeply involved in Lean work, have management systems in place and standard work.  In a matter of three days we designed new processes that will be implemented in a matter of weeks and will have a tremendous impact on quality and service.  The reason we can implement such cross-functional work so quickly is that all of the areas have standard work in place.  Thus the changes are simply integrated into the standard platform and do not take a massive project plan to get them done.  Two years ago we could not have even thought about putting this type of improvement in place and a year ago it would have taken us months.  Standard work in truly the engine of innovation and the foundational work we have been doing over the last couple of years is starting to pay dividends.  A great way to start the New Year! 

 It has been a wild couple of weeks with a lot of good work getting done before the end of the year.  Good news I guess, but that work leveling thing seems to still be elusive to our Lean team.  I wanted to thank everyone for reading and following along on the journey.  I had some fun the other day reading some of the early posts and realizing just how much ground we have covered in the last couple of years.  I hope I am adding value.  I am going to take the next week off and will return in early January with most postings.  Happy Holidays to all! 

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Over the last couple of weeks I have received a couple of emails from readers of the blog asking how we calculate the Return on Investment (ROI) for our Lean related projects at Group Health.  Or they ask me how they should calculate ROI in my opinion.   I am not sure where this interest in coming from, but I thought I would try and answer as best I could based on my own experience.  Be warned, my answer may not be very satisfying for some of you that are required to develop ROI’s by your organizations. 

When people ask how we calculate ROI at Group Health I let them know that we don’t.  When they ask how I would recommend they approach calculating ROI I tell them they should not. When we first started doing “Lean projects” back in 2005ish there was some interest by a couple senior leaders in the organization that we calculate an ROI for each of our projects.  Luckily, these demands quickly ended.  Fairly early on our journey our leadership team understood that focusing on an ROI based model was self-defeating to what we were trying to accomplish and it would drive waste in the system. 

So why do I say calculating ROI is a bad thing for Lean related work?  Here is just a starter list:

• To be successful Lean needs to be treated as a full business strategy.  It is the means by which you achieve your ends and needs to be viewed holistically.  If you run an ROI on Lean you are to all intents and purposes treating Lean as a project.  This means the goal is to come in and change something with a clear beginning and an end.  This is counter to the Lean view that you teach people to see waste and continually improve their work.  In other words, an ROI emphasizes the short-term gains over the long-term more substantial change in capability and thinking.
• I have seen organizations make this requirement and end up taking the accountability for improvement away from the line.  The Lean consultants are required to deliver a certain number of dollars per project and as a result they are often forced to over-function (or worse make costly decisions that impact the long-term) in order to deliver the result.  We have been very cautious to hold the accountability through the operation.  The operation needs to deliver the results through their processes, not Lean projects.  
• By focusing on proving an ROI you risk spending far more time trying to make a case for change as opposed to leading the change.  As we all know, often times the first try at something is not going to drive the result, but the check and adjust process allows us to learn and improve and over time drive the result.
• Lastly, trying to calculate ROI is complex and based on all kinds of assumptions, most of which turn out to be just that assumptions.  My friend Orry Fiume describes this well in his book Real Numbers where he says:  “ROI is an excellent example of the intent to capture many complex and interrelated events, thus creating on monster of a metric that few people can relate to their daily activities.”

Please don’t take me for being an advocate of being soft on performance.  At the end of the day customers will do business with you depending on the result, but lets not lose sight that the result is dependent on the process..  In order to have robust and capable process you need to emphasize the right things and ROI is not one of them.

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Yesterday, during a retreat I attended we had a very interesting conversation about how much time a senior leader should be spending meeting with other leaders versus how much time they should be spending in the gemba.  It was exciting for me to have this conversation, because it was clear that most leaders in the room felt a great urgency to be spending more time in the gemba.  Something a year ago was only recognized by a small group of leaders. 

As the Lean guy in the room I was asked to weigh in on this question.  At a first glance this might seem like an easy question to answer: “you need to spend more time in the gemba.”  That in itself is not all that helpful of an answer.  As a group of senior leaders they are responsible for working together to manage many aspects of the business, not just the daily operations.  They must develop the strategic plan, set improvement goals, manage market place threats/opportunities, work through cross-functional issues, make sure work is properly resourced, etc.  To manage these topics it means as a team they need to meet often and spending all of their time in the gemba would not be wise.  So how do they know what the right balance of time is between these two activities? 

Here is some of my initial thinking on this subject.  There is a lot more elaboration that I could make, but here are some starter thoughts.  In judging how much time senior leaders need to meet outside of the gemba they need to get very clear about purpose.  This means becoming very clear about how the time spent in meetings is helping the organization improve.  More specifically, they should ask how the time spent in the meetings are going to help improve performance at the frontline where value added activities are taking place.  If there is not a clear line of sight that can show how this meeting time will reduce waste and improve performance then there is a good chance it is pure waste and should be eliminated. 

In deciding how much time to be spending in the gemba the first question I ask leaders is have they defined a standard?  The second question is do they have management standard work to deliver on that standard and to ensure that their visits to the gemba are not just “PR visits.”  To illustrate I will share an example of one team I am working with.  The VP level leaders set the standard that they would go to gemba in their 26 Medical Centers twice per quarter.  The Director level leaders set the standard that they would go to gemba once per week for each of their six Medical Centers.  Each leader has very clear standard work which includes checking on local standards, progress of improvements and walking frontline processes.  All of the leaders have agreed that if a Medical Center falls “off plan” additional gemba walks would take place as needed. 

This same leadership team meets as a team weekly for three hours to check on the performance of the entire system and to manage cross-functional issues.  They also hold each other accountable to meeting the standards they have set for gemba time.  Quarterly the team meets to PDCA their management standard work, which often includes a heavy adjustment to the amount of time they are spending either in the gemba or together as a team.  All based on the current business and customer requirements.  

In summary, I don’t believe there is a right answer to the question about how senior leaders spend their time.  Like in the example I provided above I think the best way for a team to answer this question is to set standards and develop standard work and then check/adjust often based on what they learn and what the customer is asking from them.

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