ROI of Operational Excellence


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David E. Adams is the executive director of the Kennametal Center for Operational Excellence of the Alex G. McKenna School of Business, Economics, and Government at Saint Vincent College and was my guest on the podcast, Changing the Bottom Line thru Operational Excellence. Operational Excellence is the contemporary, cultural adaptation of the Toyota way and the Toyota production system as learned and experienced by Mr. Rodger Lewis and currently implemented by KCOE as The KCOE System.

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ROI of Operational Excellence

  1. 1. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsROI of Operational Excellence Guest was Dave Adams Related Podcast: Changing the Bottom Line thru Operational Excellence Changing the Bottom Line thru Operational Excellence Copyright Business901
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDavid E. Adams is the executive director of the KennametalCenter for Operational Excellence of the Alex G. McKenna Schoolof Business, Economics, and Government at Saint Vincent College. KCOE delivers hands-on coaching and educational resources in operational excellence. KCOE produces sustainable results through a proven balance of lean tools, employee engagement, continuous improvement, and world-class coaching. In addition to his work at Saint Vincent, Mr. Adams has served inthe U.S. Navy Civil Engineer Corps in various leadershipcapacities during a 21-year career of both active and reserveservice including a tour of duty serving Presidents Reagan andBush at the Presidential Retreat, Camp David, as the commandscontingency readiness officer. In 2001 Mr. Adams was recalled toactive duty for his expertise in anti-terrorism and force protectionas part of Operation Noble Eagle – the President’s call-up ofreserves in answer to the terrorist attacks on the U.S. on Sept.11. For his Navy service, Mr. Adams has received several awardsincluding the Presidential Service Award, Meritorious ServiceMedal and the Navy Commendation Medal with 3 Gold Stars. Heretired on 1 October 2007 at the rank of Commander. Operational Excellence is the contemporary, cultural adaptationof the Toyota way and the Toyota production system as learnedand experienced by Mr. Rodger Lewis and currently implementedby KCOE as The KCOE System. Changing the Bottom Line thru Operational Excellence Copyright Business901
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Transcription of PodcastJoe Dager: Welcome everyone. This is Joe Dager, the host ofthe Business901 Podcast. With me today is David Adams. Davidconsults and coaches executives in implementing aculturally-adapted, Toyota-inspired, continuous improvementsystem across their total enterprise that balances the human withthe operational and seeks mutual trust and respect.He leads the team of three other coaches doing the same and isthe executive director of the KCOE at Saint Vincent College inLatrobe, Pennsylvania. Now David, most of us recognize Latrobeas the home of Arnold Palmer. If I remember correctly, is SaintVincent where the Steelers have their preseason training?David Adams: Absolutely, every season begins right here atSaint Vincent College, right on the field outside of my office.Joe: I was there once, so if I remember right, there is like a biggully the football field is in, or something goes down in a big kindof plateau on the side of the mountain or something.David: Its a big bowl and weve actually constructed somebleachers into the side of the hill here. It depends on when youwere here, Joe, because back inthe 70s, it was a lot different. Sponsored byBut now its a pretty bigenterprise. Training camp is abig, big enterprise here and itlooks like a circus carnival somedays out there.Joe: Its been a while, believeme. Its a beautiful area, and if Ican remember Saint Vincents,you look down over the valleyand that blue haze in the Changing the Bottom Line thru Operational Excellence Copyright Business901
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsmorning, one of the very picturesque places in the world, even.David: Its a great place to work. Its very therapeutic, if youwill.Joe: What do the initials KCOE stand for?David: Im glad that you asked that, during the introduction.Whenever you said that, I thought, "Huh, thats interesting." Weare the Kennametal Center for Operational Excellence. If yourefamiliar with tool and die casting, Kennametal is a carbide steeltool manufacturer, global company, headquartered right here inLatrobe.I actually work at the college for the dean of the Alex G. McKennaSchool of Business, Economics, and Government, and AlexMcKenna, founder of Kennametal. We received a seed grant backin 2002 to establish the center here at the college within thebusiness school, and thats why we are named KennametalCenter for Operational Excellence.Joe: Not to plug Kennametal, but I remember them from myconstruction days. They put the carbide teeth on the recycleclaimers, or what dug up the recycle off the road. Is that right?David: Yes, thats correct. Yeah. They have a constructiondivision; they have a mining division, and then they also providea lot of the things that you see in machining operations as well.Joe: Well, I see both Operational Excellence used and Toyotacontinuous improvement system in your descriptions. Can youdistinguish between the two, if there is any?David: Were very particular about our wording there, becausewe believe that Lean has taken on a kind of a language and aframework of its own, and so were careful to say, "operationalexcellence," because we see that as a more comprehensivesystem of which Lean, and by "Lean," I mean the traditional Lean Changing the Bottom Line thru Operational Excellence Copyright Business901
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing Systemstools are a part. Theyre a subset of that.The continuous improvement system that we coach and that wehelp businesses implement, is definitely reflective of Toyota.Were actually mentored by a fellow named Rodger Lewis, andRodger was one of the original GMs that Toyota had hired, one ofthe original automotive guys whom they had hired to help themset up the Georgetown, Kentucky plant.Rodger was a class of 75 alum of Saint Vincent College, and hasbeen giving back to the college since about 2003, 2004 as anexecutive in residence, and also as a direct mentor here to thecenter. Rodgers got an interesting story, in and of itself. You cancheck out our website at to seehis story.Essentially, he went from being an exec at Volkswagen here atNew Stanton, Pennsylvania, where they used to build the oldVolkswagen Rabbit, which was kind of a failure in terms of NorthAmerican manufacturing and their marketing. From there, hewent down to Georgetown, and worked there for about eightyears, and learned, just like guys like Mike Hoseus and DaveMeier, all contemporaries of his.Rodger went a different pathway. Dave and Mike becameteachers and senseis in their own right, but Rodger went fromGeorgetown to GM and did some greenfield work for GM allaround the world, and tried to establish a Toyota-like system forGM. Then he was asked to come work for Bombardier in theirrecreational products division.For a period of about 10 years, he worked for GM, and thenBombardier. There, he really perfected this system for makingsure that youve got culture change working and in effect, beforeyou do the implementation of what I keep calling "classic Lean,"or traditional Lean tools. He did it himself. As the president ofRotax, he did it for about five years. Hes now doing it with Changing the Bottom Line thru Operational Excellence Copyright Business901
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsBombardier Aerospace as one of their senior VPs for continuousimprovement.Whats interesting is that he really hadnt thought about, "Well,how do I teach this?" And, "How do I repeat this?" So when hecame to the college here, thats really what we did. We, at KCOE,synthesized what he knew with some of the things that we hadbeen doing here at the college to try to serve local manufacturingenterprises.The result is what we call "The KCOE System," which is acontinuous improvement system, an operational excellencesystem, that culturally is adapted, but principally reflects theToyota way and the Toyota production system as we see it in theliterature.Joe: I want to sum that up. I would say that youre establishinga method of cultural change, and then the continuousimprovement system.David: The culture change is rooted and based in the continuousimprovement piece. Let me just describe it for a second. Forexample, one of the first things we do - and we start at the top,work with an executive team - we will start with a balancedscorecard and have them go through a strategic, a mini annualplanning cycle; and establish a balanced scorecard that says,"How do we want to improve over the next six years in safety,quality, productivity, human development, and cost, in thatorder?"Once we have an improvement pathway of targets for six years,then we establish a framework of PDCA cycles, daily and monthlyand quarterly. Then, we pull into those PDCA cycles basicproblem solving from the operations side.Then, from the human side, trying to unlock creativity, we bringin a suggestion system. But I think you know, and your audience Changing the Bottom Line thru Operational Excellence Copyright Business901
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsprobably knows this as well, that were not talking about thesuggestion box on the wall. Were talking about small,incremental, implemented suggestions -- implemented by theworker right there were the work is being done.Joe: Thats a big chunk, isnt it?David: It takes some time. It takes six to 12 months to get theframework established, particularly when youre working withexecutives that are generally pointing in their disciplineddirections. Alignment is one of the first things that we have todrive, but you can tell from the system. Any time you have visualmanagement, PDCA, roles and responsibilities, alignment formsaround that.Thats where Toyota gets that sense of crisis every day. We call it"crisis on the tip of your tongue" because every day yourestopping for 15 to 30 minutes and say where the problems thathave occurred over the past 24 hours. Were not problem-solvingin that meeting. Were reporting on problem-solving activity. Thediscipline that forms from that is pretty significant, but it requiresa lot of discipline at the executive level to get that to form.Joe: Is this framework different than others out there? Or,"Have you seen one similar to this?" maybe is the betterquestion.David: We havent. I know that there are others out there thatsubscribe principally to the same ideas we try to teach and we tryto coach. Ive been pretty vocal about essentially critiquing whereweve come in the past 15 years in North America as wevepursued what I continue to call traditional Lean methods.Jim Womack is an amazing, amazing thought leader in this areaand Ive read and followed up on things that hes said. But,essentially, weve taken that Womack five-step method and wevemade an industry out of it. Changing the Bottom Line thru Operational Excellence Copyright Business901
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThere are Lean consultants out there that will sell you a return onyour investment, but the problem with that is, how will thatreturn be sustained in a year, in three years, in five years? Canyou hold onto it? Can you hold onto the gain? Theres enoughliterature out there that clearly indicates that those gains are notbeing held simply by implementing Lean events, Lean tools alone.There has to be some sort of a management system thatundergirds the system of tools. Its the management systemthats the harder thing to get. You can throw a book about theToyota management system at a group of people and say, "Go dothis." But implementing a management system is like switchingfrom Windows to Mac OS. Its a painful experience. You have toretrain your mind to think about the decisions that youre making,perhaps even down at the values level, if you will.What does customer-first focus mean? How does that translateinto a daily decision-making experience whenever problems areoccurring in, say, quality or productivity or cost? Which one do Iwork on first? Therere thousands of problems occurring everyday. Which one do I work on first? If Im customer-first focused?We may address the quality over the cost problem, depending onthe severity of it.Joe: When you take this upon yourself as an organization to dothat, there seems there has to be such a leap of faith. Its notquite the blind leading the blind, but you have that feeling, dontyou?David: Absolutely. In your introduction, you mentioned mutualtrust and respect. The first thing that has to happen is mutualtrust and respect has to develop between the coach, andsubstitute whatever word you want there. We use the word"coach" the same way people use the word "mentor" or "sensei."Weve been down the road. Weve seen the system and theframework implemented in enterprises as far-ranging as car Changing the Bottom Line thru Operational Excellence Copyright Business901
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing Systemssales, to automotive or motor manufacturing, to health caresettings and hospitals. A large portion of our business right now isin hospitals. Part of that is just developing mutual trust andrespect, and it has to be at the highest level of the organization.A perfect, perfect match for us is whenever a CEO, myself or mycolleague coaches, would see eye-to-eye. Youve heard thephrase or the cliché, "Being like-minded," and thats essentiallywhat it is. I can work with CEOs that maybe are expressing theirmanagement system differently, but if were like-minded, thenwe can begin to have that mutual trust and respect.It involves the kinds of things that you wouldnt expect, the CEOwho calls -- maybe even the most tactical question that he or shemight have -- theyre calling back to say, "How does this work inthe system? How does this work in the framework that youretrying to teach us?"A lot of mutual trust and respect, and that faith has to developover a period of time. We have to prove that the system is goingto yield the kind of culture change results that were looking for.You dont have too many CEOs that are out there looking forculture change.They may be mouthing those words and saying, "We want culturechange," but truly what they want is a return on their investmentand a change on the bottom line. We can get you there, but wecan only get you there after you change the culture thatundergirds your improvement system.Joe: You bring one thing up there that I want you to define alittle bit for me. What is the difference between a coach and aconsultant?David: We definitely dont want to create an animosity towardsconsulting at all, because essentially, we do that as well. Thedifference between a coach and a consultant in our definition -- I Changing the Bottom Line thru Operational Excellence Copyright Business901
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthink we say this on our website somewhere -- were not going tocome out and implement anything for you. Were going to comeout and were going to coach you to implement.To use, since football season is upon us, were the coaching staffon the sidelines. We cant play the game, but we can certainlyhave a pre-game plan, and we can coach you during the game,and we can have a post-game plan and watch the films with you.But we cant get out there on the field and play with you, sothats our definition. Thats the difference between a coach and aconsultant, in my humble opinion.Joe: When we talk about adult learning cycles, we go throughthis "learn, do, coach" approach. Do you follow similar progresswith an organization?David: At the outset of an engagement, what I want myexecutive team to understand is that they are about to become ateam of teacher-coaches, and that about half of their time isgoing to be spent teaching-coaching others in their organizationto learn how to use the framework, to create a situation wherecontinuous improvement is part of everybodys job every day,and you cant get there.This is classic Toyota. You cant get there unless your leader is ateacher-coach. Mike Rother has done a fantastic job ofcharacterizing the essence of this in a book that he wrote called"Toyota Kata," and I use it a lot in my coaching activities. I pickoff different chapters of it, just to let people know that, truly,youve got to change the way youre doing business.This is the difference that Im talking about, that the biggestcultural shift that has to occur right off the bat is that executiveleader has to rethink and recast who he or she is in theorganization with regard to their responsibilities. Half of theirresponsibilities is to train up folks underneath them, or besidethem, in this continuous improvement framework. Changing the Bottom Line thru Operational Excellence Copyright Business901
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Talk about the training aspect. Someone has to learn it,and then theyve got to go do and practice it, but is there like aStage Gate Review or something? How is competencedetermined? Its easy to do in school, because they take a testand they do it, but in the actual, real world, when do you knowsomeones ready to go from the "learn" to the "do" stage?David: We do some didactic classroom style learning, but mostof the learning that we do is coupled with practical exercises.They may be tactical or tabletop exercises, or they may be rightthere in a tactical situation, where were taking people right towhere the work is being done and saying, "OK, this problem justoccurred. Now, lets do what we call "The three Gs. Go and see,Get the facts, Grasp the situation."Toyota has the concept rolled up into Genchi Genbutsu, or directobservation, but we want to take people right to where the worksbeing done to be able to practice direct observation, so lets justtake that skill for a second, direct observation. Thats what Imtrying to teach and coach as a leader.Why? Whats the imperative there? The imperative is that if wedo that, then were going to be using facts as opposed toopinions, particularly when were trying to make decisions thatare based on problems that have occurred.I may do some introduction of the principle and the idea in theclassroom, or even one-on-one as Im teaching, but I quicklymove that to, "Let me show you what Im talking about here," soI want to model that, and I want to have them do it by thenumbers with me, and then I want to go bounce back and forth.Were so Western in our thinking that we look at a cycle, and weeven think that a cycle is linear, so its "learn, do, coach." Whatreally happens is the cycle between "do" and "coach," we kind ofbounce back and forth between those things. We do it, and thenwe coach it, and then we do it, and then coach it. Changing the Bottom Line thru Operational Excellence Copyright Business901
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThe problem with us as a Western culture is that we want to raceto - the equivalent situation would be, particularly in business andparticularly in manufacturing; we want a 250-yard drive everytime, all the time, and we want it right on target, but were notgoing through the necessary or macro movement steps to dothat, so the "do" and the "coach," we just bounce back and forth,bounce back and forth.To try to get to the answer to your question, "How do you knowwhen?" Thats the importance of the coach. The coach, who hasbeen down this road before, who had done, and done a lot, isable to see the basic skills emerging, and they are thegatekeeper. The coach becomes the gatekeeper.Thats really the way we do it, and I think thats kind of what youwould find, even in job instruction even at Toyota thats exactlythe kind of thing that you would find. Ive got to repeat thisoperation, I need to show the trainer that I know how to do it 50,60, 100 times. And then I can move onto the very next thing thatI need to be trained on.Joe: Do you see someone headed down a path that is wrong anddo you just leave them go?David: Sometimes. I dont know if you have kids, but Ive gotfour kids and sometimes I allow them to fail so that they canlearn the lesson. And to translate this into executive context, weare a bunch of alpha types out there running around and we thinkthat we know pretty much everything.I include myself in that equation, when I began to come underRodger Lewis mentorship, Im a retired naval officer. I served inthe Navy for 22 years, and you talk about type A personalities,bump up against a crowd of naval officers, and youre going tohave a fight about whos going to lead where.As I came under Rodgers mentorship, one of the things I first Changing the Bottom Line thru Operational Excellence Copyright Business901
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing Systemshad to understand was that I didnt know everything. And thatskind of what I bump into most, its the idea that I know or thatIm going to default back to my management system that hasserved me well for 20 years, and Im not going to move to thisnew way or this new approach.I will often allow an executive leader to go down that pathway tofail, because theres so much learning value in the failure. Now,obviously, Im not going to let him or her do that and be unsafein any way, or put the business at risk in any way. It would be acontrolled experiment, and again, as a coach you begin to knowand understand, and actually, leverage, you begin to sense thesecontrolled experiment opportunities.Ill give you a good example. Next week, Im heading up to aclient thats outside of our region - no names, healthcare client,executive team - and theyre really, really struggling with directobservation. They are rushing and using opinions andassumptions to try and solve major corporate problems thatrequire that entire team to slow down and get some facts, anduse direct observation to get the facts.This week Im going to show up. They know that they are to showup at 11:00 in a conference room, and whenever they get to theconference room, theyre going to find a little index card laying onthe table that says, "Come and find me at such and such locationto do some basic direct observation training."So were going to go from the coaching, were going to bounceback up to the doing, and we may bounce all the way back up tolearning. We are trying to get them to move as a team, thats theother critical piece here. We dont want them to move justindividually. We start with individual, but the way we characterizethat is "I to, We to Us." We need to teach them to be a "We," sothey can be a better "Us."Joe: I think one of the things that I first made the mistake of Changing the Bottom Line thru Operational Excellence Copyright Business901
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing Systemswhen practicing continuous improvement Lean, is that since wereat Gemba, since were at the root of the problem, those changesare pretty minute and small in the overall structure, becausewere dealing with, for lack of a better word, the task at hand orat the place of work. So, those changes, those failures are notdramatic.David: You are absolutely right. Im going to be taking them toa lab in a hospital setting and when we do this direct observationexercise, were going to be looking at task level things in aprocess. The process is giving us a point of recognition of aproblem, but really when they do their direct observation, theyregoing to be analyzing and trying to comprehend task level things.Just like a good coach, a coach is not going to let someone failwithout failing forward. John Maxwell uses that cliché, the authorJohn Maxwell, "That when we fail, we want to fail forward." Andfailing forward, to me, is failing with the objective of learning, soIm not going to let them fall headlong; Im going to hold ontotheir hand, so they dont fall headlong, but Im going to grabthem right before they hit the ground, because the learningopportunity is huge at that point.Joe: Were always talking about the operational excellence, andwe always have to talk about getting leadership on board, butleaders are pretty smart guys and we all want to have operationalexcellence. Wheres the disconnect?David: I think its the hard wiring; I think there are a couple ofthings working against us in terms of hard-wiring. And byhard-wiring, Im thinking about not so much value system, butpretty much mindsets and attitudinal hard-wiring. One is thatmost of our culture is set up for individual success. You haveprobably been in organizations -- I have been inorganizations -- where everything from your performance reviewto your discretionary compensation is based on your individual Changing the Bottom Line thru Operational Excellence Copyright Business901
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsperformance.And in a system that is so individually performance-driven thanmost of the continuous improvement activity, if you dont try todisconnect that hard-wiring, most of your continuousimprovement activity is going to continue in that direction. Sothats one piece but I think, youve got to undo. And then theother thing is, just kind of where weve come in the past - I dontknow -- 30 years or so, I guess.Ive been working for around 30 years, and I didnt see it in thefirst part of my career because I was in the Navy. As I moved intosome larger organizations, corporate culture, and then into highereducation, there is just not a true call to action to move as ateam. We move as a team and we behave as a team whenever acrisis is upon us.I use this whenever I do training. I actually have people thinkabout the last major crisis that they had as a leadership team,and then I begin to ask them, "Did anybody bring their personalagenda to the table?" And the answer is typically, "No. No, theydidnt." "Did all of those personality quirks that you really dontlike about your teammate, did they affect the way that youhandled the crisis?" "Well, no they didnt."So what explains that? Why did that happen? We could spend halfa day, and I can talk to you about why I think that happens, butmore importantly, for a leader, "How can I get that sense of crisisto translate into something that I do everyday, so that I canbegin to break down the hard-wiring against individualperformance, individual improvement and move more towardsteam improvement?"Think about how we handle a Lean event right now. Ivewitnessed this probably hundreds of times, where we cometogether to conduct a Lean event and what are wecommunicating to that team? Well, theres a time to do Changing the Bottom Line thru Operational Excellence Copyright Business901
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing Systemscontinuous improvement, which is an oxymoron in this case. But,there is a time to do continuous improvement and theres a timenot to do continuous improvement. And when youre together asa team, we work on improvement activity, but what happenswhenever the improvement activity has ended? Are we stillintended to work as a team?So what is your management system telling your organizationabout team behavior? And, why am I going on and on about teambehavior? Team behavior is one of the things that undergirds theToyota way and the Toyota production system. And its easier tosee in Eastern cultures. Folks who come from an Eastern culturalbackground, they do display, in my humble opinion; a differentsense of connection to community than we do in the West.Good, bad, or indifferent, it doesnt mean that we cant change. Itdoesnt mean that we need to be exactly like Eastern cultures.We just need to make sure as leaders that we understand thatand we create a system for change that overcomes that.Joe: So is operational excellence the Western cultural version ofToyota production?David: In my context, yes. Just like Lean -- if you go out thereand you ask whats the definition of Lean? Youre going to getmaybe 20 different answers. Operational excellence as a phrasehas taken on many definitions of its own. The reason that weadopted it was because it does come up in the Toyota waydocumentation, so we just felt that was a way to respect that.For us, operational excellence is the human and the operationalbalance and a culture thats moving towards mutual trust andrespect. Those are the two things and think about that. Thatdoesnt really sound very operational from a traditionalstandpoint. If you want to define "operational," its hittingtargets, getting better and solving problems. Well, yeah, its allthose things as well, but you also have to pay attention to the Changing the Bottom Line thru Operational Excellence Copyright Business901
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing Systemshuman side. So thats why we say, "Balance the human andoperational, and strive for mutual trust and respect."Joe: Is it all culture? I mean, is that really just what it gets downto?David: Youve got to have some system for continuousimprovement. There is no argument in my mind that in order toget good material flow, the application of a Kanban system isabsolutely the best way to pull material into the process. Weteach it in two ways. We teach an early Kanban application. Wecall it Kanban I out of II.And Kanban 1 is getting material to flow to the process. But, thereason that we do that is to give a living demonstration to a workteam as they live that material flow Kanban of how a pull systemworks. So if they can understand pull systems as material ispulled into the process, then theyre going to be better equippedto learn how to do production pull systems. As long as youve gotrelatively level demand.Quick answer to the question is "Yes." I think culture is theend-all to whether or not youre going to have a sustainablecontinuous improvement system. I would go even one stepfurther, use a guy named Edgar Schein, who has written quite abit on organizational behavior and organizational culture inparticular.We use Scheins model for culture, in that he shows it as atriangle with actions and behaviors at the top, mindsets in themiddle, and values, and then, beneath values, he even goesfurther and calls them beliefs or convictions.In order to get to behaviors that are culturally supportive ofcontinuous improvement, you have to have leaders who areculturally supportive of continuous improvement and thats ashift. Its a shift. Its one thing to want continuous improvement; Changing the Bottom Line thru Operational Excellence Copyright Business901
  18. 18. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsits quite another thing to do and live continuous improvement asan executive leader.So Schein says that the primary responsibility of leadership is tocreate culture. And so, based on that and what my personalexperience is, I think the answer to the question is, "Yes." Leantools have their place, and Lean tools are the way to solveproblems in a system of continuous improvement.But we need to create a culture that allows workers, where thework is being done, to be able to stop and solve problems. Wealso have to unlock their creativity in solving those problems aswell. So thats the operational and the human in balance.Joe: Everyone wants to develop that community where we shareideas, improve that think tank or incubator-type thinking. Haveyou tried that and can you discuss your failures and successes?David: In the early years at the center here, we created anetworking group. I think one of the biggest failures was calling ita networking group because, essentially, what we would have ispeople who honestly wanted to learn from one another aboutLean implementation, and about operational excellence, andabout the things that we were doing in culture framework andthings like that.But then, we also had about half the group that were, again, notto be pejorative, but were consultants who were trying to sell tothe other half of the group. So that was one of the biggestfailures that we had, was just calling it a networking group. Overthe years, what that has morphed into is our Institute forOperational Excellence. Again, if you want to learn more about it,you can take a look at what we were trying to do in the institutes case is tooccasionally convene face-to-face meetings or video meetings.Like-minded people who were trying to learn, who were kind of Changing the Bottom Line thru Operational Excellence Copyright Business901
  19. 19. Business901 Podcast TranscriptionImplementing Lean Marketing Systemspositionally connected with each other, so directors of continuousimprovement, director of Lean, weve had a CEO executiveleadership colloquium for health care leaders.What were trying to do is better understand our role as weconnect to the external community of learners in Lean andoperational excellence, and try to understand what they need andtry to meet their needs. We do that in different ways, butgenerally, its those two ways of convening meetings, and thenan online facet to our Institute where we have tried, throughsocial media, to connect people to each other.Ive got to tell you that, too, probably, in my mind is anotherfailure mode for us. Its difficult when were conditioned to usethings like Facebook, or LinkedIn, or Twitter to introduce yetanother social network that connects people.Were actually falling back; I think, over the next year or two,where were going to take the online effort from our Institute,and were going to fall back from the social media front, and fallback into traditional social media methods. And then where weregoing to advance, were going to advance on the front of trying toimprove the resource material thats connected with our standardtopics.Joe, for example, we would do a standard topic called, "Daily andMonthly Meetings." And we have all kinds of educational materialon that, that we have developed on our own. Weve got videocontent. Weve got voice-over PowerPoint. Weve got writtenwhite papers. But wed like to grow. Where we want to advanceon that front is to bring in other resources that specificallysupport our position and advance our position.So other voices, besides just KCOE. Other voices that wouldspeak to that learning community in agreement, and then wewould come away from that with some common learning there.And a good case in point is, I mean Jeff Liker is a prolific author Changing the Bottom Line thru Operational Excellence Copyright Business901
  20. 20. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsin all things Toyota. He has a fantastic technique of pairing up,partnering up with thought leaders that come right from Toyota.So if you read the "Toyota Leadership," with Gary Convis, I thinkits a fantastic read. I constantly use that book.I use "Toyota Culture" where Liker co-authored with Mike Hoseus.I use the "Toyota Way" field book all the time, where heco-authored with Dave Meier. And Dave and Mike are friends ofthe center. They are great principal sources for us, and resourcesfor us, and for that learning community. So thats a way Ivetackled it. Like I said, networking from the days gone by wasprobably our biggest failure mode.Joe: With that network community, youre saying that you needto get similar roles together to make it work?David: Part of that comes from our understanding of culture. Forexample, one of the artifacts that I look for towards the 9- to12-month point in one of our implementation engagements is forhow prolific the new language has become in an organization. Arethey speaking in terms of points of recognition, target conditions?The biggest thing I love is whenever I hear somebody use anacronym that comes from our system, like the 3Gs, "Go and see.Get the facts. Grasp the situation." Or, the 3Ps, "People, Patience,and Passion." Ill actually hear that in casual conversation. Youwalk down the hallway, and you can see people holding ourproblem-solving sheet and talking about the 3Ps, or talking aboutthe 5Ys.Language is really important, and realizing that, when you pull acommunity of learners together, one of the biggest things thatthey have to overcome is this lack of common language, or moreimportantly, back to Edgar Schein and his work, he calls culture ashared experience. And so, youve got people who are havingshared experiences out there. Changing the Bottom Line thru Operational Excellence Copyright Business901
  21. 21. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsA great example of this is as Lean is taking on new life, androbust life in health care settings, many health care organizationsare adding at the director level, and in some cases, the VP or theC-suite level, primary Lean implementation officers, if you will.So the director of Lean, director of continuous improvement,director of operational excellence, these guys are all swimming inthe same pool, and they have this shared common experience of,"Were trying to implement a continuous improvement system."Many other things in health care settings are working againstthem. When we get them together as shared roles and sharedresponsibilities, that initial common ground provides the bindingmaterial that you need to get a good learning communitytogether, because theyre learning about the same things, buttheyre learning it, also, from the same avenues of approach, ifyou will. I dont know if that makes sense or not.Joe: Is there something that maybe I did not ask that you wouldlike to add to this conversation, or something thats coming upthat youd like to plug?David: On October 16th, this year, here in Latrobe at SaintVincent College, we have what we affectionately call our NorthAmerican Operational Excellence Summit. Its a one-dayconference here at the college. Its a really, really good eventwhere we bring out a thought leader who is coming on strong inthe literature that were reading. This year, were having Mr. JohnNance as our keynote speaker.John most recently wrote a book called "Why Hospitals ShouldFly." John is a commercial airline pilot. Hes a former Air Forceofficer. Hes got his J.D., so hes a lawyer, and he has been doinghealth care consulting for about 20 years as well. His basicpremise is, "Why is it safer to fly on a commercial airline than it isfor you to spend three days in a hospital?" Changing the Bottom Line thru Operational Excellence Copyright Business901
  22. 22. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWith that as a background, as the call to action, our audiencesare always mixed, manufacturing and health care, service; itreally doesnt matter, because the call to action is safety first.How does safety first result in a better bottom line? With that asa background, well be talking about things like the balancescorecard, daily and monthly meetings, problem solving, theestablishment of some sort of a steering committee forimplementation.This is a gathering, essentially, of folks that are in our learningcommunity already, so we dont do any of the talking. They do allthe talking. Were just there to facilitate the discussions and its aone-day conference, and if you need more information, again,check out our website at Is the website the best way to get hold of you?David: Yeah, absolutely. You could do that. You can follow meon twitter at @commanderadams and you can also find me onLinkedIn as David Adams. Im always open to phone calls as well.My local number is listed on my LinkedIn profile, so if anybodywants to talk or chat about learning or about culture first andthen, Lean, I would be happy to spend some time. Changing the Bottom Line thru Operational Excellence Copyright Business901
  23. 23. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Business901 Phone: 260-918-0438 Skype: Biz901 Fax: 260-818-2022 Email: Website: Twitter: @business901Joe Dager is president of Business901, a firm specializing inbringing the continuous improvement process to the sales andmarketing arena. He takes his process thinking of over thirtyyears in marketing within a wide variety of industries and appliesit through Lean Marketing and Lean Service Design.Visit the Lean Marketing Lab: Being part of this community willallow you to interact with like-minded individuals andorganizations, purchase related tools, use some free ones andreceive feedback from your peers. Marketing with Lean Book Series included in membership Lean Sales and Marketing Workshop Lean Service Design Workshop Changing the Bottom Line thru Operational Excellence Copyright Business901