Oregon Effective Government Presentation

Developing a Lean & Agile Organization September 29, 2009 Ron Wince Guidon Performance Solutions, LLC

“Prosperity is a great teacher; adversity a greater.” - William Hazlitt (English writer, 1778-1830) 2 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

My aim for this session To give you some new thoughts and ideas, and bring practical experience, on how you might tackle your most critical issues 3 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

State Government Agencies are in a Perfect Storm • Many government agencies are seeing a 2-10% revenue drop • Pressure on staffing – Pending retirements – Increasing pension and benefits costs – Staff reductions driven by budget shortfalls • Increasing demand and expectations – Social services demand increasing – retirees & unemployed – Higher visibility for government performance – Accountability for the way money is spent The sky is not falling – it is all about how we adapt to these changes 4 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

The Roadmap • Focus On Time • Lean Processes • Get People Involved • Technology as an Enabler If you don’t know where you are going…. any road will take you there 5 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

The Common Element Time: A lens to evaluate effectiveness and identify improvement opportunities Increased expectations for improved quality, cost and responsiveness - simultaneously “Today, it’s all about speed. Time-obsessed management may well be the primary battlefield in the pursuit of global competitiveness in the next ten years.” - Tom Peters 7 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Focusing on Time The key is to reduce processes and effort to “core value” 8 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Getting to Core Value Traditional Car Rental Process Wait in line Take bus From gate to From counter at rental At counter to terminal rental counter to bus counter Confirm Locate reservation car Review & Hertz Gold sign paperwork Drive From Take Credit card to exit Drive gate bus imprint to exit to bus to car Receive rental contract Receive car assignment 9 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

What is Core Value Speed is achieved by identifying and eliminating waste…in processes, innovation and decision making 10 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Identifying and eliminating waste is the focus for LEAN… Waste is seen differently in LEAN… – One of the stumbling blocks to LEAN is understanding the concept of waste. – Traditionally waste has been viewed as an object. It is very easy to envision a barrel of scrap and identify it as waste. – In LEAN thinking the term waste actually refers not to the physical material but rather the relationship of the resource to the end customer. In LEAN, waste is measured in consumption of resources: Time and Capital 11 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Waste in Government Examples of process wastes are: – Not collecting the data needed for information processing at all steps during the initial contact. – Collecting or reentering the same data at multiple steps. – Disseminating data beyond those who require it (for example, doing an unnecessarily large e-mail dissemination). – Not providing for the convenient and efficient use of office equipment. – Inconsistent locations for data, files, and other items necessary for particular processes. – Excessive processing of documents. – Inefficient use of electronic resources. 12 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Results of Focusing on Time & Waste Source: Professor Goran Persson, Norwegian School of Management Companies with end-to-end cycle time advantages of 25% – 50% over their competition in business processes: • Leverage time advantage to achieve growth 3X – 5X industry average • Attract the most proﬁtable customers and enjoy price premiums of 20% or more than their industry average 13 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Improving Processes With LEAN Your most powerful competitive advantages are where the work gets done “The secret is in the dirt.” -Ben Hogan 15 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Applying LEAN Principles • Begin with the customer and look for waste • Use consumption of time and capital as a common baseline • Systems Thinking – End-to-end delivery of value – Total system versus silos • Flow - Eliminate Queues and Wait Time – Agile and responsive processes – Standardize work to eliminate variation • People who do the work know it best “Nothing is so wasteful as doing with great efficiency that which need not be done at all.” 16 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

What others say about Lean – Simplicity “Lean Is Inexpensive and Generates Solid Returns” • Unlike other process improvement methodologies such as Six Sigma, Lean programs do not require significant up-front capital investments or certification. • Lean concepts are easy to apply given that they are, as one member stated, “applied common sense.” In addition, institutions leveraging Lean techniques report immediate results of 20% to 40% cost reduction in 12 to 18 months.” Corporate Executive Board, Operations Council™ 2006 Study on Lean Manufacturing for Financial Services 17 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

What others say about Lean – Effectiveness “Lean Adopters Identify More Waste and Operate More Efficiently” • Lean institutions identify two times more cost-reduction opportunity than non-Lean adopters by seeking to eliminate non-value-added activities • Furthermore, Lean adopters operate more efficiently, maintaining cost-efficiency ratios that are considerably lower than the industry average” Corporate Executive Board, Operations Council™ 2006 Study on Lean Manufacturing for Financial Services 18 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

It’s All About People “In all the years and all the places I have worked this is the very ﬁrst opportunity I ve seen where the people who are on the ﬂoor and doing the job have the chance to change things for the better.” Pat Ramsay, Clerical Assistant, Kaizen team member 20 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Leading LEAN Improvements A leader creates unwavering passion and excitement for a vision… that drives cultural transformation across the enterprise… resulting in sustained competitive advantage and increased stakeholder value. 21 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Building Blocks to Engagement Create a sense of urgency Change the focus Develop leaders Communicate openly and often Focus on your customers Encourage and sustain innovation Align through shared accountability – vertically and horizontally Allocate resources to ensure success Promote continuous improvement Maintain discipline and focus 22 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Your Role Set the Tempo • Set the business vision and strategies • Create passion for leading the change – Make it personal • Set stretch goals that are radical and uncomfortable (high wiggle factor) • Define the critical few objectives • Establish metrics and incentives • Leverage Kaizen Breakthrough Events for engaging associates in collaborative problem solving 23 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Kaizen Breakthrough Events • Collaborative, cross-functional problem solving which promotes rapid implementation of improvement ideas • Improvements – Small – Rapid – Utilize minimal resources • Leaders and workers working together to make improvements with low capital investments 24 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Rapid, Sustainable Results Productivity 20-30% Defects 70-90% Lead Time 40-70% Work In Process 70-90% In a few days … without spending major capital 25 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group

Client Examples • An approval process for one customer reduced the processing time to less than one day from 12 days - a 92 percent reduction. • The City of Fort Wayne, IN reduced the time to fill a pothole within 3 hours of it being reported. • The City of Cincinnati reduced the recruiting time for a police officer from 20 months by 35 percent. • In another project the City of Cincinnati reduced the time for the engineering department to submit and process a sewer easement plan from 324 days to less than 15. 26 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Stepping Stones for Leadership • Communicate continuously • Provide the resources • Provide skills and knowledge • Plan, Do, Check, Act: monitor and countermeasure – Daily, weekly, monthly, quarterly reviews • Personal, visible involvement • Develop next level leadership • Maintain focus and re-evaluate priorities 27 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Role of Technology in LEAN • Enable LEAN transformation – Transparency and accountability – Communication and information flows – Automation as a final step in LEAN transformation – Creativity before capital • Differentiator if developed and deployed faster than competition – Lean IT – Faster, better, cheaper – Develop only the features that immediately add value – minimum marketable features – Minimize wasted effort in developing technology • Test driven development • Tests are linked to value add expectations from the customer – Perfect technology is a myth – why keep trying to create it 29 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Key Take Aways • Time – Powerful competitive force – Often difficult to duplicate • Apply LEAN principles to processes – Reduce and eliminate waste – Focus on value-adding processes – Move from push to pull • People are the linchpin – Engagement and participation – Leadership • LEAN can transform government – Faster, better, cheaper – Differentiator to thrive in any economic climate 30 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Things You Can Do Tomorrow • Choose 1 or 2 pilot processes • “Walk” the process as if you were the customer – with the people who do the process, support the process or lead the process – Apply Outside-In thinking – Measure the process in consumption of time and capital – Identify the steps which don’t add value but consume resources or capital – find the 7 wastes – Eliminate as many as you can – Streamline everything left • Find the next process and keep going 31 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Lawn Chair Larry “Lawn Chair” Larry Walker, 1982 32 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Leading Through Turmoil …use time as your focus and LEAN as your foundation. Thank you and good luck! 33 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Questions? 34 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Oregon Effective Government Presentation

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