Gemba Coach talks PDCA

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This is a transcription of a podcast with Dr. Michael Balle, the Gemba Coach on the Lean Enterprise website. We discussed PDCA as the culture of Lean.

This is a transcription of a podcast with Dr. Michael Balle, the Gemba Coach on the Lean Enterprise website. We discussed PDCA as the culture of Lean.

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  • 1. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsGemba Coach talks PDCA Guest was Michael Balle Related Podcast: Gemba Coach talks PDCA Gemba Coach talks PDCA Copyright Business901
  • 2. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Michael Ballé is the co-author of, The Gold Mine, a bestselling business novel of lean turnaround, and recently, The Lean Manager, a novel of lean transformation, both published by the Lean Enterprise Institute. For the past 15 years, he has studied lean transformations, helping companies develop a lean culture. He is an engaging and colorful public speaker, experienced in running interactive workshops. As a managing partner of ESG Consultants,Michael coaches executives in obtaining exceptional performancethrough using the lean tools, principles, and managementattitudes. His main coaching technique is the “Real Place Visit,”where he helps senior executives to learn to see their ownoperational shop floors, teach their people the spirit of kaizen anddraw the right conclusions for their business as a whole. He hasassisted companies in their lean transformations in various fieldssuch as manufacturing, engineering, construction, services, andhealthcare.Michael holds a doctorate from the Sorbonne in Social Sciencesand Knowledge Sciences. He is co-founder of the Projet LeanEntreprise and the Institut Lean France (www.lean.enst.fr),France’s leading lean initiative. It is conducted in collaborationwith Telecom Paris, where Michael is associate researcher. Dr. Michael Balle is the Gemba Coach at the Lean Enterprise Institute Gemba Coach talks PDCA Copyright Business901
  • 3. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe Dager: Welcome everyone; this is Joe Dager with theBusiness 901 podcast. I would like to welcome Michael Balle.Michael has been studying the link between individual reasoningand large-scale change for the past 15 years. Hes a Lean expertand contributed to the Lean Edge and Michael you defined this forme but you also are the European or the French arm of the LeanEnterprise, is that correct?Michael Balle: Senior Adviser to the French Lean Institutewhich I have started here, yes.Joe: I always think of PDCA as the culture of Lean or the cultureof the TPS system. How do you look at PDCA? Is it more of a toolor is it a culture?Michael: Thats a very interesting question and youre certainlynot going to get a short answer on this one because it more ofour belief that tools and culture are interlinked. I think ultimatelywere all bias with our tools and much of our culture is made ofour tools and how we use our tools. What makes a big differenceis the fact that the same tools are used differently by differentpeople.So, in this sense I have to answer yes to both. I think that PDCAis essential to the Lean culture and its also a tool. And as aculture its nothing else than a collection of individuals. Wevenever seen a culture roam the streets or order a drink in a bar.Its a collection of individuals and the question we have to askourselves is what does PDCA mean at an individual level? Andhere I think its very interesting because we definitely are biasedwith PND. Weve developed a culture of planning which is veryhighly valued and certainly of doing. So, most people will thinkabout planning the next move and then executing the next move. Gemba Coach talks PDCA Copyright Business901
  • 4. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWere appalling at confirming and were terrible at drawingconclusions because its all water under the bridge and its allembarrassing and its all a big debate. So what I think is reallyinteresting at PDCA is how do you as an individual learn to pauseand confirm your results? And then once these results areconfirmed try to draw some conclusions in terms of eitheradopting or adjusting or the act part of PDCA and then startingagain.I think that is what brings Lean so close to scientific thinking isthat just because you like an idea doesnt make it true. Eventhough your chemistry tells you, I like this stuff. It sounds good.Its intuitive; I have a gut feeling about it. It just means that youlike the idea. It doesnt make it true.So we teach people when... Its a personal incident so you haveto learn how do you confirm your ideas? What makes you thinkyoure right? You feel right but everybody feels right abouteverything. This is the summary field. If not we would have adifferent idea.Joe: Michael, when you say that, thats the tough part becausecan everything be tested? You want to confirm it but it is reallydifficult because so many times you cant test one individual thingthat youll have two or three things that you are doing from theplan stage and youre saying test it here is what you have to do.But how do you test all that stuff? And how do you know that oneparticular item caused it?Michael: Well, OK. This is a very complex subject, lets take itsimply. Lets instead of testing, lets call it humbly, confirm it.Can everything be confirmed? Yes it can. I can just talk to andsay, "This is what I think, would you confirm it?"For instance Im good friends with one of the CEOs and hes oneof the top guys in Lean construction, hes got a construction Gemba Coach talks PDCA Copyright Business901
  • 5. Business901 Podcast TranscriptionImplementing Lean Marketing Systemscompany. And hes been making remarkable profits from theLean effort. When he took over the company the crisis justhappened so his volume crashed 40 percent in the first year hewas CEO.With that 40 percent he went from a zero profit of the previousyear to a significant profit just doing Lean. So, we had thisconversation, why is it working? Its a serious conversation. Weknow what were doing. We think we know what is working butwe still have three years down the line in this conversation.We can see it working, but why? So, we have different ideas, wetry different things and all we do sometimes is just chat,challenging each other and confirming the facts. I have ahypothesis today, we were talking about better communicationand he said, "Well, yeah maybe youre right in some cases andsome not." So, to me that can be a very simple and humbleprocess that you are rather than defending your own ideasbecause you like them. You go into a process with people youtrust, fact based, youre together at the Gemba and you just tryto confirm.Joe: So youre saying that confirmation but we still need datadont we?Michael: First thing we need is facts. The way I see it is to haveinformation data needs context. So data plus context isinformation. Information plus understanding is knowledge andknowledge plus compassion is wisdom. So you build it up.If you just have data and its out of context it doesnt tell you asmuch about anything. So the thing about facts is youre in thereal place, youre with the people and you look at the data andthe context and you understand where the data comes from.Then what you confirm is you confirm your understanding. Yeah,we understand the information, thats not what happened but do Gemba Coach talks PDCA Copyright Business901
  • 6. Business901 Podcast TranscriptionImplementing Lean Marketing Systemswe understand this and we compare it and its this confirmationof this understanding that gives us the knowledge.The bit about compassion is actually very important because ifyou dont put the people, your customers first, your peoplesecond in the equation and try to feel how they feel and lookfrom their eyes and stand in their shoes, well you probably willmake some very unwise decisions. And well have fought togetherfor all the people we know and depend and all the terrible thingsjust seem to wilt were people who they thought had the perfectknowledge but lacked compassion. They didnt put people in theequation and they end up taking decisions that are technicallycorrect and humanly dumb.There are many degrees of confirmation. The most obviousconfirmation is I have an idea, what do you think of it? Then wecompare our data, our facts, our experience and its aconfirmation.But if you are genuinely interested in knowing whether youropinions are correct or not, you can go to greater degrees ofconfirmation. Then you are asking their manufacturers when youlooked at a quality issue. First thing you say is, "Lets look at thefactors and what kind of experiment we could imagine to confirmwhich factor is most important." Then you can move all the wayto Six Sigma and very quantitative methods and there I will agreewith you that not all things are quantifiably testable.But you see, confirmation is a range of things. Now where PDCAbecomes very smart is by because it loops back on itself. So,while you better understand your confirmation process you startplanning them.Let me give you again an example of this construction companyagain. So the CEO is very into being socially responsible. Hebelieved that we should have buildings that create less carbon Gemba Coach talks PDCA Copyright Business901
  • 7. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsconsumption and lets say, less heating consumption. So hewants to reduce the waste of lost heat. Now, he has been veryserious about it for years. So, he put his company into acompetition.He was actually gutted because his project didnt get selectedbecause all the projects got selected were the real showy, veryexpensive, high tech, completely undoable in an industrial formatbut looked good in a brochure and his project was morereasonable and it didnt get selected. It was very interestingbecause out of this failure Rob would then just say, "OK. This isnot for us. Forget it." We started thinking Lean about it.We thought, "OK. Hang on. Do we have a test method for a lowerconsumption building? Do we know what were talking about?" Hewent on a different way and he got an engineering firm and theybuilt together a carbon consumption calculation for buildings. Sonow, hes got a different look at it, which is hes got a testmethod.He looks at when theyre engineering the building. They look atthe carbon... They have a ranking of carbon consumption andthey started looking at things that would improve this ranking. Sohere, we see PDCA you start integrating your confirmationmethod into your plan and it takes you to complete differentdirections. It takes you in terms of planning for complete differentactions.Joe: If you developed your check into the plan itself then it justbecomes a way of doing business.Michael: A firm belief and I think it was echoed in I think theresa quote of such an old saying that business is a fight of opinionswith your empathy. I have a firm belief more generally thatbusiness is about opinions. If your opinions are correct you makemoney. So its like in the stock markets on business if your Gemba Coach talks PDCA Copyright Business901
  • 8. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsopinions are true, you make money. If youve got the wrongopinions, well the market punishes you. So absolutely, PDCA is away to test your opinions and to build progressively throughtesting more sophisticated opinions that fit the facts better.PDCA is incredibly smart, because weve been discussing how theplan should integrate the fact that he had a test method. But inmany cases, you dont even know where the plan should be. Itsan open area. So what do you do? You do Kaizen! You do Do.Before you have a big plan you try things and there you just trythings and through the deep you just can start building a deeperunderstanding and a bigger plan. So PDCA is not just onemechanical, bureaucratic thing that you do PDCA like you see inthe A3. First do the... No. No. No. Its a thinking that you have toplan, you have do things and you have to confirm and you haveto Hansei. You have to stop and think, "Are we reaching the rightconclusions?"So, there are PDCA loops at every level. We do this at the CEOlevel and at the very Gemba level with every operator we do thisas well, this is the right way to build the parts. So then, you weretalking about the culture. Yes, when you start having a criticalmass of people in the company who are starting use PDCA intheir way to do their job something happens. Something doeshappen.Joe: Thats where you start seeing that and people just startthinking differently, they start looking at things differently?Michael: They start opening doors that they didnt know werethere. They start innovating - its usually hard work, its not veryglamorous - but they start innovating and adapting in ways thatyou had not anticipated before. Which is for my part as anobserver where it becomes really fun? Gemba Coach talks PDCA Copyright Business901
  • 9. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsBecause its like weve been walking down this corridor for yearsand we never knew this door was there. But somebody, some guyopened the door and said, "Oh. This is a dark strange room full ofobjects we bump into." But then we shine some light on itthrough the experiments and through use and so that door is...And nobodys there. Nobody is going there.In business this is absolutely brilliant. Its like this story aboutthat suddenly you find yourself... what are they called? Thecompany started coming up with patents and innovative ideas.Usually its not a killer app, its not probably going to take awaythe world. But youre definitely building knowledge yourcompetitors dont have and I think thats the glory of it.Again, its very far from a very restrictive... I would argue thatLean is about cost reduction. But its about being very innovativein the way you seek to reduce cost. Cost first, cost for yourcustomers in terms of customer ownership and cost ofmanufacturing and cost out the general operations or theoverhead. So, as you open these doors as you find new ways ofdoing this you can attack these three forms of cost and Lean yourcompany.Joe: But when you go into an engineering department and youstart talking PDCA to them, how do they react to it and how doyou first introduce that to them to make it effective?Michael: Ah! It depends upon; again, its all about people. Somepeople will want to learn and some people hate it. So, which caseshall we take? Shall we take the easy case or the hard case?We think that they want to do it, yeah? Sometimes they do. Sowhat we started saying, "Guys, first we organize as teams. So,they said, "OK fine. We can organize ourselves with three to fivepeople as a team and lets assume that we can say one guy is ateam leader. Hes not the boss but hes just the reference guy, Gemba Coach talks PDCA Copyright Business901
  • 10. Business901 Podcast TranscriptionImplementing Lean Marketing Systemshes the more experience. He understands the technique better.Hes not a manager."And the first thing we do is say we start it with checking. Firstthing we do is every time we modify a part, every time we redrawa part, lets just write very simply what was the problem wesolved on this part, how did we solve it and lets catch it. So, thismeans that I have a PDCA interaction with every drawing.When I finished every drawing my team leader comes for afive-minute chat, just lets go through the problem you solved onthe part. That means that on the part you start accumulating ahistory of a part. So, when youve done this for a couple of yearswhen a new guy takes the part he understands why the part isthe way it is because he could read all the reasons that this wasdone and so forth.And then we question it again, can we make it lighter? Thatswhere wed start the PDCA in engineering.Joe: One of the things I think is really funny about the wholething is that Lean and PDCA is a very visual tool. We talked aboutLean and visualization and I think that you go back and if yourenot visual youre not Lean. OK, Ive heard that many times and Ithink thats a good saying but the most visual, the most creativepeople are the ones that seem to resist the implementation ofLean in a company. Does that strike you as odd or do you seewhy? Or do opposites just attract each other?Michael: You once brought up a very interesting point in termsof whats the link between the PDCA and the Nonaka adds explicitstuff. And what PDC does particularly through the confirmationmechanism is bring you to explicit, "What do you think?" Youhave to spell out your plan. Gemba Coach talks PDCA Copyright Business901
  • 11. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsYou have to describe your experiments. You have to explain yourconfirmation method and you have to make a stand. You have tomake a stand about your conclusions. I know some very creativeguys who are perfectly at ease with this and some who are notand I think its more of a question of trust and teamwork than thepersonality itself.I think that in a team that goes well... At first they all find it a bitsilly but if they go "Oh, well this is OK. Well do it." And here isthis - what we discussed last time - youll see the magic of it. Isthat this uncovers what people know and the others dont know,rather than always discuss what we already know in common.When you go through this visualization of "explicating," what is inyour mind so the guy next to you is saying, "I didnt know that."Or, "What makes you think that?"Then it becomes extremely very rich and when a team ofengineers has tasted how rich it is, the debates disappear. Theyunderstand why they do it and they keep at it.Joe: Well thats one of the things that Ive talked about doing inmarketing a lot, is that I use an A3 - which is basically PDCA - inthe process so that knowledge can be transferred and recordedand people know who to go to, to get it if there are somequestions left in it. I always thought that was a good way tointroduce Lean to the creative department or the engineeringdepartment. What do you think the drawbacks are of doing it thatway?Michael: I think again its a sliding range. The first thing I wouldsay to engineering Id start with these very simple checklist forthe part, then we say, "OK, lets take the folder and in this folderyou just put a lot of checklists, anything that comes to your mindthat you consider as a standard." For instance, I have standardsand when I break them I suffer. One of my standards is never Gemba Coach talks PDCA Copyright Business901
  • 12. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsdiscuss... Never do business in Lean with a guy whos notinterested in Lean.In the Lean world you have all these guys who are completemercenary and they think theyre onto something and they say,"Dont worry. I dont need to understand Lean myself. I dontneed to do it myself. I just need to sell Lean and thats going tobe fine." Well one of my standards is just stop talking to theseguys, theres no point because its going to end badly.You have standards and engineers they discover they havestandards and standards are not rules. Standards are things thatyou know that if you step over that line, something will happen.So the next step is well have a folder of standards and everytime we get out of the standard well discuss why. If we have anextra part, if we suddenly do an assembly process differently, itsfine. We can do whatever we want but well discuss one.Then third, finally we get into actually using the A3s. Now theA3s is heavy machinery. The A3, we use it when we want to goto the end of a problem we really dont understand. The A3 forme is really collaboration between the very senior engineer andmore junior engineer and together the senior guy gets the juniorguy to go all the way to a deeper understanding of the physics ofthe problem.The other way we use A3 is when we want to share a proposal. Ifwe want to do things differently on a new product well have aproposal. Well put it in A3 because then we can circulate itamong everybody and ask for everybodys input and idea.So, absolutely I think A3 is a great tool. Theyre a bit heavy foreveryday use. Again, assuming its a sliding rule and the toolshould correspond to the difficulty of the problem. Gemba Coach talks PDCA Copyright Business901
  • 13. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsSo a very easy problem we just say hey, stay a bit longer, look atit a bit harder. Then we go into the Agile, using the checklists,and then into the very difficult problems we use the A3. So, doesthat answer the question?Joe: They call themselves a Lean company but they really arenot when they leave sales and marketing as silos out there bythemselves. They dont want to touch that.Michael: I see what you mean.Joe: To introduce it to the creative department. To introduceLean, the typical first thoughts people have of Lean is pricereduction, waste. But its really about building knowledge.Michael: I completely agree. I think John Shook has beenbrilliant in seeing two... He has written the books about the twotools which are the granular ways to introduce anybody to Lean.One is value stream mapping. To somebody whos never done itits just such that the light goes on and go "Wow!"The other one is A3, absolutely. To somebody whos never doneit, the light goes on. So, absolutely, if we go into a department,into places that havent been touched by this, the two tools Iwould use without any hesitation would be to draw the valuestream of what were doing - its always enlightening, whateverhappens its enlightening - and to start using A3 as acommunication method. Absolutely! This is absolutely where Idstart. The risk is of getting bumped down.Joe: What do you mean by that?Michael: Well the A3s are high maintenance tools.Joe: Youre saying thats a lot for someone to start out with?Michael: Im saying the first time. Im saying theyd probably doit a second time but we were talking about culture and PDCA as a Gemba Coach talks PDCA Copyright Business901
  • 14. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsculture. Im saying that if you dont learn to be a bit Lean, abouthow you use your tools, you can get people a bit tired of it andsoon they get into the formalism of it without putting the spiritinto it. If you want to use A3s continuously we want to give otherPDC or methods for people to do simple stuff without goingthrough the whole collabra of the A3.Joe: Can you tell me some of the simpler PDCA methods then?How would you term that? What is that?Michael: Checklist? First, as were doing this podcast now, canwe write on one simple sheet of paper, not to do the podcast butto do it well? I have to get the lighting right, I have to make surethe microphone is switched on, I have to put the kids to bed, andthis will fit on one A3 sheet... Sorry, A4 sheet of paper and willhave five lines written in large black and white large letters.This is already knowledge capture and creation and you have"read then do" checklists or you have "do then check" checklists.So, checklists definitely in marketing think about the number ofchecklists you have. So the idea is that everybody, actually Ivegot it here...Its this old tired book. This old tired book has all my Leanstandards and all the things I picked up through traveling theworld. And I go back to it. I refer back to it and when I have aproblem I go back and with any new problem Id look through thebook and saying, "Get my head back into it."Joe: So, youre really saying is that one of the best ways tointroduce Lean to lets say a non-Lean department is to createstandard work. Without, lets say maybe taking standard work tothe far end but I mean...Michael: Youre taking it a bit far because were talking aboutintroducing... I think the first thing Id do, would be to think Gemba Coach talks PDCA Copyright Business901
  • 15. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsabout stable teams. I really think that understanding whos ateam and whos not, wheres the team and whos the team leaderis really important. Then Id say, well though lets do the twothings you mentioned. Thats where I start; lets have a valuestream exercise, which I will never touch again, but as a way tobring them in to understand that they are part of somethingbigger. I think that is very important.Then we will probably start doing some A3s which I wont touchimmediately again. Having done that, they are interested I say bynow lets everybody take one Kaizen subject. One Kaizen topicand this is how I start. So I first start with Kaizen and just Kaizenand piece and confirmation.Once weve done that then I say to people, well what came out ofthis Kaizen? Write it up as a checklist in your words as astandard, as a checklist. But my approach tends to be small stepscontinuously so we build it up slowly.Then later on I will bring back the increase and typically in thecompanies I work with weve done a burst of A3s at thebeginning that people dont know how to maintain and thats OK.We say, "OK. Never mind." Later on when they have worked withPDCA and all the methods of visualizing PDCA, which is usuallyjust P-D-C-A. At some point one of them does something quitecomplex and say, "You know what? You remember that A3 stuff?I could put it in an A3." And you say "Yeah, go ahead."Joe: We talk about Kaizen and we talk about PDCA, can youdefine the difference. They sort of run together dont they?Michael: Well, there are two types of Kaizen. Yes, they runtogether. Id have to distinguish two types of Kaizen. One type ofKaizen is problem solving which will be as SDCA to nitpick. Whichyou start with a standard, the standard is already there and the Pis that fact that youre not working a standard. So, you have to Gemba Coach talks PDCA Copyright Business901
  • 16. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthen do something to bring it back to standard, check that youreback to standard and A; draw the conclusions on why you werenot on standard.Then theres a Kaizen which you want to move one step forward,you want to improve. So then you would do PDCA in terms ofwhats your plan to improve. Do something and confirm that youhave improved and draw the conclusions. But essentially yeah,that Kaizen and PDCA are linked, but in many cases it can be avery active PDCA.It can be a just do it PDCA. It can be Im a great believer in backof an envelope PDCA. See, when youre in front of a cell andsomebody looks at it then says, "Well, we can do a Kaizen orPDCA or we can do an A3 while we have too many people." Icould have the kind of PDCA that would say "Listen. Lets pullsomebody out and see how the cell works. Lets write on the backof an envelope what we think and then pull somebody out andwrite what happens." That would be PDCA as well. Kaizen equalsPDCA. Yes. I can buy that.Joe: I just seen some different terminology and when Imthinking about it Im thinking about Kaizen, Im thinking aboutPDCA, and Im thinking about continuous improvement and a lotof the names seem to blend together. That part, I think, of justevolvement of a methodology that becomes fewer things todistinguish between them.Michael: You have to distinguish. Kaizen is the idea thattomorrow is going to be better than today and that its not goingto be a big step, but a small step. Then the day after tomorrowwere going to take another small step. So Kaizen, what are youdoing tomorrow? Joe, ask yourself in what you do in marketing,what have you planned to do tomorrow that will make tomorrowbetter than today? Gemba Coach talks PDCA Copyright Business901
  • 17. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWhat have you planned to do tomorrow that would make the wayyou edit this podcast better? Now thats a Kaizen question and tobe a really Kaizen question is, what have you got to do tomorrowin less than one minute that is going to make your work betterthan today?It has to be a small step. This is very clear. Kaizen is abouttomorrow I have an idea that is going to make the way I do myjob better; my workstation, my cycle or something better thantoday. Thats Kaizen and the day after Ill have another.PDCA is the method so I dont lose myself. Once I have thisKaizen in mind Im going to do this through PDCA. Im going towrite my plan; Im going to do it. Im going to confirm what Ivedone and Im going to draw conclusions so I learn. So, you canmake Kaizen without PDCA but chances are that youll end upwith a random walk of changing things without actuallyimproving, if you see what I mean. But they are two differentconcepts.Joe: When we talk about knowledge, how do lean companiesthat youve worked with capture that knowledge? Whatmechanism do they use when youre taking lets say that tacitknowledge and move into explicit, is that standard work?Michael: The Lean companies I worked with recognized from theoutset that knowledge is embodied in a person. They recognizedthat there is no such thing as knowledge in general. They dont somuch capture knowledge as the capture of the ability tocommunicate the knowledge. Now let me go into a bit of tantrumtrip but I think in many jobs we have...What has happened latest DKs is complexity. Whatever job everycompany knows to do an enormous amount of things, they knowhow to do many, many things but the problem is the person you Gemba Coach talks PDCA Copyright Business901
  • 18. Business901 Podcast TranscriptionImplementing Lean Marketing Systemshave right in front of you doesnt. Theyre not incompetent,theyre inept. It drives you crazy.You go to the bank and you know the company knows how to sortout your problem. You know somebody in the company knowsbut the guy or the lady in front of you doesnt. And it drives youmad. So knowledge is captured somewhere in all the proceduresand how do you work with banks? They receive hundreds ofprocedure modifications every week. Of course they dont readthem. But the poor person in front of you doesnt.So really then, in a Lean company we understand this problemand what we work at is the communication within the company sopeople get access to the knowledge. For me, the A3 is acommunication tool more than anything else. Checklist is acommunication tool.For instance, if the lady at the bank knows that when she doesntknow something she rings her boss, "I dont know how to dothis." Either the boss comes and does it and she doesnt learn orhe says, "Pull out your folder, read on page 14 and follow thatand then Ill come and youll tell me how it went." Then she haslearned tremendously.So knowledge captured in a Lean company comes in a form thatits not so much about capturing knowledge but facilitating thecommunicating link between the person who knows and theperson who doesnt.Joe: What were really saying is pull the "andon chord."Michael: Thats the core of Lean culture. Thats the one tool thatthe old man invented that was the first stone of Lean. This is theone stone that is still so hard to see in companies but that is theheart and soul of Lean is the andon chord. In order to pull the Gemba Coach talks PDCA Copyright Business901
  • 19. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsandon chord you have to know the standard because if not youdont know when to pull.In order to answer the andon chord you have to know thestandard because if not you dont know what to tell the operator,absolutely.Joe: So, when we pull the "andon chord" we also have to feellike gee, I dont know that its bad. Its got to be OK to pull the"andon chord."Michael: Its part of the secret of Lean. We have this expressionin Lean. Not guilty. Not guilty. We know the guy drinks. Fine. Notguilty.Its a very militant assumption that people are not guilty. Iftheyre doing something strange its because theyre in a strangesituation or theyre not being helped and we need to figure outwhat made them do what they did. So, not guilty and no fear areabsolutely essential to a Lean culture because if not they will notpull the andon chord.Joe: I think one of the problems we have in the western cultureis that pulling the andon chord is admission that we dont knowsomething and thats looked at as bad.Michael: Absolutely. When one of the things that I think theygot from Taichii Ohno is we must reveal our mistakes. Its verypainful. This is what, about red veins and endless cords andwhatever it is. Weve created an environment of trust in which wereveal our mistakes.Our mistakes are not something to blame someone for butmistakes just become interesting. The better you are, the rareryoure mistakes, the more interesting mistakes you make. Itskind of fun. It takes some getting used to but after a while once Gemba Coach talks PDCA Copyright Business901
  • 20. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsyouve gone over that pain threshold and you realize this is notabout you, this is a way to work,Then Ill everything is a lot cooler, conflict goes down. Theres noblame. You just did something, fine. Lets talk it over. Lets seewhat happened.Joe: One of the things I think about from lets say the marketingperspective you have to externalize PDCA to be successful. Youhave to have continuous improvement in your marketing but alsothe companies that you work with, you have to be willing to sharethat knowledge and pulling the "andon chord" for a customer, asa company saying I dont know something that I need to knowfrom you, to develop that culture and that relationship, thatteamwork between them is really what I think is the essence ofmarketing today is where it needs to go.Michael: I think youre absolutely correct. I think youre totallyright. At engineering its a problem we have because when youwork with an engineering product you know you cant ask thecustomer. Because if you have a customer and says "What doyou want with this?" The customer will come up with whatevercomes to the top of their mind. They want bells and whistles andthe chances are that its actually not true in terms of yes, they dowant them, but theyd never use them.And to me its the difference between the brilliance of Google.The Google site just does one thing. It helps you do it because ifyou misspell, it tries to figure out what you meant to do so youcan still get to where you want as opposed to most websites thatdo millions of things.Youll probably one day ask them that "Oh yeah, it would be agreat idea to have my if I could have me horoscope every daynext to the weather forecast next to the stock market." The truth Gemba Coach talks PDCA Copyright Business901
  • 21. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsis that right now, when you actually want to use the website, youdont care.So what we have in mind in engineering is that we want ourproduct to become a standard for the customer, a default for thecustomer, that they take our brand, they take our product, notsomebody elses, ours. And to do this, we try to understand whatthe cost of ownership of our product is.Through the use of the cost of ownership we figure out not somuch what the people say they want, but what they really dovalue in the use of their product. These things are the things wetry to deliver value on.So again the whole thing about PDCA is linked to the kaizen interms of what do you apply PDCA to, because if you startapplying PDCA to everything, you just go crazy? You just bogdown, its just too complex. You have to very clear in what youreseeking to learn with PDCA.Joe: I think thats a good way to put it and to sum it up becauseIve seen where someone has went and asked a customer andthey come back with a list of all the things that they want in thisparticular product. You cant build it in the price range that thecustomer is going to pay for it.But if you go out and ask the customer to define his needsclearly, you can engineer the product to fulfill his needs. And thatyou can do at a price, in a...Michael: It seems very ambitious. What I do is I get myengineers to go out and ask their customers "Is there one thingthat really, really, really pisses you off about the product? Justtell me one thing that you have a problem with this product, justone." And you come back with one and you fix that and then youstart again. Gemba Coach talks PDCA Copyright Business901
  • 22. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWhen youre talking about kaizen you have to do it in very smallsteps. Now, the truth is that if you do this relentlessly for anumber of years, and were back to the discussion of findingdoors you didnt expect that were there in the corridor. Youregoing to come up with some innovative and adaptive solutionsnobody has ever thought of. But its a kaizen; tomorrows producthas to be better than todays by a small step.So we ask the customer "Listen, if theres one thing that we couldfix for you on this product, what would it be?" Theyll tell you.One thing they can tell you. Theyll tell you three things and youcan sum up, again, all the data into one thing. So OK, lets fix thisone. Then you start again.Joe: Were saying that to be effective and to do it outside andexternalize it, its best to go ahead and bottle it up into smalleriterations that you can manage and you can handle, because youcant do everything at once?Michael: I think there are really two radical ways of looking atthis. Companies often look at markets and they want to come upwith a killer app. They want to come up with a product that takeseverything in the market. So what they do is they take all of thenew technologies out there, everything a competitor has, theytake it and they put it in their product. And of course, they dontmaster any of this very well, so that the product comes out, itslike, I think we discussed this already.If you take the body of a Ferrari and the engine of a Porsche andthe interior of a Toyota, whatever, and then you put all thosetogether as a car, you wouldnt get a very good car. But in factthis is what many people do in terms of this idea that they wantto get the market.We think virgin. We take a product and we want it to be standardof the customer. So we take it to the main customer type and say Gemba Coach talks PDCA Copyright Business901
  • 23. Business901 Podcast TranscriptionImplementing Lean Marketing Systems"Guys, this is what youre already buying. This is good. If therewas something we could do to make this product better for you,what would it be?" And you fix that in small iterations. And youend up in a different place. So yes, I would completely agree withyou on this one.Joe: I think its kind of funny what you just said there, becauseyou gave a perfect description of how most government contractsand government bids are written. They take the best of like fouror five different companies and they combine them into bids sothat it comes close that nobody can build it. And they wonderwhy the price is high.Michael: There you go. Im going through it right now. Thats itexactly. And on top of it, they ask you to be accountable forresults.Joe: It goes back to really defining the needs of the market, theneeds of the customer. And not so much in the terms of how youapply it, but how they apply it and then making your product orservice meet those needs.Michael: I think that Jim and Dan, when they wrote "LeanThinking," were incredibly insightful. The first thing they said was"Well, can you define and specify value?"I think thats very interesting because when people read this,they say "Ooh wow, yes we should do this. But ooh, wow, its toohard. Lets move on to the next one. Oh, flow. Oh yeah, we candraw a map."But I think youre absolutely right. You talk about needs, I talkabout preferences. What makes a customer in front of two similarproducts prefer one? Thats what we need to capture. Usually itsa feeling. How do we translate these feelings in technical ways? Gemba Coach talks PDCA Copyright Business901
  • 24. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsYou know, when you buy a Toyota, your preference is to peace ofmind. Other people buy cars that their preferences would besportiness, or look, or size. Toyota sells peace of mind, whichexplains why when they had the safety scandal it was such ahuge problem to them. Suddenly, regardless of the fact that therewas nothing wrong with their car, the scandal negatively affectsthe peace of mind of Toyota owners. So you take a lot of valueout of it.Certainly when I drive my Prius one of the things I value is thesilence inside. Again, this is the feeling of silence. Its just notthat the car is not noisy; its the feeling of silence. So I would gobeyond needs; its preferences. Preferences are usually about afeeling that the object gives you.As engineers, how do we translate this into technical parametersthat we can then reproduce through a manufacturing valuestream or through a knowledge value stream? I think this ishours of fun. When you get into it, its very hard, its verydemanding, but it really takes you into very different directionsfor your products .And in the end its interesting to see that youmake very different technical choices.Joe: I think the age of marketing has become - you have thefour Ps of promotion, price, product and place. But I think there isa fifth P now and what I would say is preciseness, precise, isreally what its come down to. You have to be very precise inwhat I call, not just customer value, but the CTQs, the critical toquality issues of customer value is what you have to address.Its just not customer value now. You have to go right to themCTQs and address it. And to do that, you really have to go toGemba, which is the customers place.Michael: Right, it brings us back to conversation on PDCA andexplicit knowledge. I think youre totally correct. I mean, were no Gemba Coach talks PDCA Copyright Business901
  • 25. Business901 Podcast TranscriptionImplementing Lean Marketing Systemslonger madmen, being brilliant and having these large statementsor these hunches and feelings are not enough.We now have to have bring it back to precise statements of whatwe have in mind and to confirm these statements with customersthrough experiments with products so that the knowledge is yes,precision, the knowledge is far more precise. Absolutely, I agreewith you.Joe: I think the reason for that is, as I go back, is that were in ademand-driven environment versus just supplying people things.So that customer does have that choice; he can go buy a productanywhere.Michael: Well, were in a renewal environment. We see thiswhen we look at studies about well-being and economy. At first,well-being increases with wealth and then it plateaus. One of thereasons for that is because if you dont have a washing machineand you get one, youre massively better off. You feel muchbetter.But when you have a washing machine and you replace it, youremarginal well-being is very limited. I think weve reached thestage where now there are very few products you get excitedabout. The iPad, I mean there are so very few products that arenew. Most of the products we have or services we have arerenewal products. The new one is not even really better than theold one; its just a bit different.So its hard to get that pizzazz, that interest. So yes, its verydemand-driven. And in that world, taking away cost of ownershipis a very sane strategy because again, you establish yourself as astandard because there is a burden to choice.One thing I would add to demand-driven, I would really thinkabout increased complexity. We have the means to do everything Gemba Coach talks PDCA Copyright Business901
  • 26. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsin our lives, but the complexity compared to just 100 years agohas exponentially increased. Its incredible. There is everythingeverywhere. The knowledge is everywhere; its very complex.There is a psychological burden to this complexity. We have tomake far many more choices than anybody before.So if as providers, we simplify the choices because its ano-brainer then our product just works better, is lesscumbersome to use, is less costly, then customers will naturallyflock to it and be loyal to the brand. Not because of the brandimage, because they trust it.I think this is where the lean approach is completely adapted to aworld of change, of demand-driven and complexity-driven worldof marketing.Joe: I see lean as just a natural, just spot on for whatshappening with the demand-driven world. Lean is a naturalreaction to it.The best way to get a hold of you, youre a contributor to "LeanEdge," and also you have your own website also, dont you?Michael: The best way would probably be the Coach column onlean.org. Every week I answer specific questions about lean. Ithink thats probably where we can go into more detail about leanproblems and lean applications, which I find quite challenging andinteresting. People come up with the strangest questions. I try toanswer in a more specific way.Joe: This podcast is available on the Business901 blog site, andalso the Business901 iTunes store. So thank you very muchMichael, I appreciate it again.Michael: Joe, I thank you. You had some very insightfulquestions. Thank you. Its a great conversation. I think it is reallygood, I really enjoyed it. Gemba Coach talks PDCA Copyright Business901
  • 27. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Lean Six Sigma Black Belt Ph: 260-438-0411 Fax: 260-818-2022 Email: jtdager@business901.com Web/Blog: http://www.business901.com Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joes ability to combine his expertise with "out of the box" thinking is unsurpassed. He has always deliveredquickly, cost effectively and with ingenuity. A brilliant mind that is always apleasure to work with." James R.Joe Dager is President of Business901, a progressive company providingdirection in areas such as Lean Marketing, Product Marketing, ProductLaunches and Re-Launches. As a Lean Six Sigma Black Belt,Business901 provides and implements marketing, project and performanceplanning methodologies in small businesses. The simplicity of a singleflexible model will create clarity for your staff and as a result betterexecution. My goal is to allow you spend your time on the need versus theplan.An example of how we may work: Business901 could start with aconsulting style utilizing an individual from your organization or a virtualassistance that is well versed in our principles. We have capabilities toplug virtually any marketing function into your process immediately. Asproficiencies develop, Business901 moves into a coach’s role supporting theprocess as needed. The goal of implementing a system is that the processeswill become a habit and not an event. Business901 Podcast Opportunity Expert Status Marketing with Lean Gemba Coach talks PDCA Copyright Business901