Daily Kaizen

From great adversity comes great innovation. This was the case for Toyota, who transformed their business philosophy and processes after Japan was decimated by World War II – bringing the world lean thinking, andToyota the title of world’s largest car manufacturer 60 years later.

On a much smaller scale, a great innovation is emerging from the adversity of recent financial outcomes at Group Health: a process to provide a line of site from our Hoshin goals to a quantitative gap between target and actual for key organizational drivers that illuminates the need for improvement, and serves as the measuring stick throughout implementation.

This opportunity arises from the work of Mike De Luca and his team in the Delivery System Finance consultancy, who have been guiding the organization through a systematic root cause analysis to identify causes of abnormal expenses. This process has brought a calm, systematic, fact-based method to what had the potential to turn into fire fighting actions. From this approach the organization has learned that there is no one culprit in the current situation, but instead many process-based causes or drivers.

Specific to our lean journey, the organization has also learned something that has the potential to greatly increase lean improvement – a systematic approach to drill down from strategy to measurable targets, creating the opportunity to apply this thinking and process as a standard foundation for improvement, versus the optional outcome of improvement that it is now. Lean, finance, and others have known about this problem for some time, but the finance and lean consulting functions are still figuring out how to partner in supporting operational leaders toward more focused improvement.

The standard process created by Mike and his team, and the Toyota Kata concept of the “Target Condition” (describing both the target measure and a description of the desired process to achieve this target), seems to provide the framework for lean and finance consultation to merge into a shared cross functional process, greatly enhancing the way by which the organization does improvement.

An example of how this could play out:

• Operational leaders, with consultation from lean and finance use a standard process (based on above) to drill down to key drivers from yearly Hoshin focus area goals.
• From these key drivers, targets are set, as well as the process description to consistently meet those drivers forming the target condition.
• A quick assessment is done to identify the gap between the target condition and the current state (does the gap require transformational or incremental improvement?).
• If transformational, improvement work is built toward achievement of target condition (contracting, method chosen, etc).
• If incremental, connect the target condition to the Daily Management Systems of front line teams, putting the team in position to use their lean tools and skill to continuously improve toward it.
  • Note: Although the focus here is on key cost drivers – it’s of equal importance that all teams experience all the focus area goals becoming meaningful at the front line (not just those involved in key cost drivers). For example:  the lab supervisor at any clinic should clearly understand how to identify and drive daily improvement in line with the affordability target even though they won’t see clear evidence of their impact on the key drivers of inpatient days.

• For both transformational and incremental, targets are added to the linked management system to ensure leader standard work continues to pace improvement on the gap.

The opportunity for our consultancies is to take a process that we have successfully applied to specific situations and apply it more broadly. We can help the organization translate Hoshin goals into specific improvement activities at the operational level. We can do this by improving our own consulting standard work to include cross-functional and shared consultation. From this improved process will come the opportunity for two consultancies to find a harmonious partnership that greatly increases our value to the client—the operational and strategic leaders of this organization. And most importantly it will help us to deliver increased value to our patients – through focused, data based improvements.

I continue to be encouraged by our organization’s ability to turn performance gaps into opportunities to learn, living out the phrase “problems are gold”. What other improvement opportunities on the lean journey are emerging from problems at Group Health and / or other organizations? Help us learn from your experiences too.

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One of the most powerful aspects of Lean is that it teaches team members to view their processes through a new lens.  It teaches  us to understand and seek out waste and it requires us to question “why” things are done the way they are done.  Whether it is at work or living my life I have learned to see waste and thus opportunities everywhere.  One of my favorite experiences is when cross-functional teams come together and walk the process.  It does not take long for them to start asking each other “why do you do that”, because “your team needs it”, “really we have been doing that for years”; “oohhh.”

Having the ability to see waste can also be a challenge, because it can quickly lead to frustration.  The more opportunity you see the more you can become impatient with how quickly things change.  While impatience can be a good thing it can also lead to bad behavior and bad outcomes. I have seen many leaders become frustrated with their teams, because they were not able to “see the opportunities” that the leader could see.

It is important to always take the mindset that things are how they are, it is not anybody’s fault, and now how can you help coach/teach others to see the waste and improve the process?  Leaders have to realize that often for many years team members have worked very hard in often wasteful processes.  Over time unnecessary work can seem to those doing it like very useful work.  All of us confuse activity for value.  The trick is teaching people, in a constructive way to step away from the process and to question the process.

Just last week I walked a process with a team where an administrative worker had been manually entering data to support a downstream process that ceased to exist over a year prior.  The change had never made it back upstream and the activity was for nothing.  This presented a great opportunity to redeploy this effort, but also presented a very sensitive situation.  Nobody likes their work to be labeled waste nor do they want to do wasteful work. The leader did a wonderful job in handling the situation and ensuring that the outcome was constructive.  Yet, they could have chosen to be frustrated or critical thus ensuring the future waste will remain undiscovered.

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