1. THE MINISTRY
OF LEAN
Organisations and interviews featured in this edition include:
Commonwealth Bank of Australia, Care Quality Commission, TriHealth,
Newsprinters UK, Academi Wales, Joe Bell, Bill Bellows, Valeocon
Management Consulting and Nycomed.
IN THIS ISSUE:
Spreading the word: LMJ visits Newsprinters UK, the Scottish printing
presses recently awarded the Shingo Prize.
Sharing the caring: The Care Quality Commission (CQC) is the
independent regulator of health and social care in England; they talk to
LMJ about their lean practices.
Wales: the land of the lean: We interview the head of continuous
improvement and change at Academi Wales, to see how you go about the
mammoth task of leaning an entire country.
Exploring the place of lean in government services
2. 2
Dear reader,
Governments. Love them or loathe them they’re awfully big these day,
aren’t they? They’re often the largest employees in a city and seem to
spawn yet more and more agencies and tentacles, reaching out. Now,
we’re not getting political here - we’ve no desire to start a debate about
small vs large government - but with such a proliferation of services
in the modern day, it’s no wonder many are looking to lean to help
them out.
Whether it’s attempting to co-ordinate the work done between
departments and agencies on projects or looking to cut costs (but not
jobs) in other areas, lean is now ensconced in the public sector, and
in this summer double issue of LMJ we want to explore the pitfalls and
positives of such a relationship.
We have head of lean from Academi Wales, Tony Mizen, to discuss lean
in the civil service. A quick way to describe Mizen’s role is head of lean
for the whole Welsh government. So we asked him: how exactly do you
lean and entire country? The answer? Very well.
In other government articles we have an interview with Darren Spark
from Care Quality Commission. This is the regulation body who monitor
healthcare providers in England and Wales, to maintain standards
and procedures are enforced. In times of austerity and change in the
healthcare system, lean is more important to the organisation than ever
for, so we explore how lean has helped this multi-faceted operation to
sift through the bureaucracy.
We are joined by Bill Bellows for his second Out of the Blue column.
Bill joins us for topical comment and analysis on those issues in the
lean community that affect us all and how we can look at them from a
different perspective.
And just in case we weren’t spreading the love: we’ve got lean in
healthcare from the nurses’ perspective, with Lisa Humphrey and Ryan
Francis, from Ohio-based TriHealth, to explain how they maintain
standards and push for excellence.
On top of this, the case study this issue is from Panalpina. A lean
orientated logistics company who have been doing wonderful things of
late. They took on a new scheme called knowledge transfer partnership
(KTP) and have seen amazing results. It’s a partnership between
education, industry and government and they’ve come to sing its praises.
Away from civil service and government I travelled up to Glasgow one
more to visit News UK’s Motherwell printing presses. Part of the Rupert
Murdoch Empire, this site was recently awarded the Shingo Prize. We
were shown around and given all the inside gossip on how you win such
an illustrious prize.
As usual, we also have a roundup of news, events and social media
activity. This issue’s lean online focuses on some of the new quick-read
blogs going up on the LMJ website- so whet your appetite for more with
some of the best.
We hope you enjoy this issue and happy reading.
Andrew Putwain, Commissioning Editor.
E D I T O R ’ S L E T T E R
E D I T O R I A L
Commissioning editor
Andrew Putwain
a.putwain@hennikgroup.com
Managing editor
Victoria Fitzgerald
v.fitzgeral@hennikgroup.com
Editorial director
Callum Bentley
c.bentley@hennikgroup.com
D E S I G N
Art editor
Martin Mitchell
m.mitchell@hennikgroup.com
Designer
Alex Cole
design@hennikgroup.com
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4. 4
Our experienced editorial
board members contribute
to the journal providing
comment against articles
and guiding the coverage of
subject matter.
INTRODUCING YOUR EDITORS
More information on our editorial
board, their experience, and views on
lean is available on the LMJ website:
www.leanmj.com
RENÉ
AAGAARD
Novo Nordisk,
Denmark
JACOB
AUSTAD
LeanTeam,
Denmark
BILL
BELLOWS
President,
In2:InThinking
Network
JOHN
BICHENO
University of
Buckingham,
United Kingdom
BRENTON
HARDER
Commonwealth
Bank of Australia,
Australia
PAUL
HARDIMAN
Industry Forum,
United Kingdom
SARAH
LETHBRIDGE
Cardiff Business
School, United
Kingdom
TORBJØRN
NETLAND
Norwegian
University of Science
and Technology
(NTNU), Norway
JOSEPH
PARIS
Operational
Excellence Society
NICK RICH
Swansea
University, United
Kingdom
STEVE
YORKSTONE
Edinburgh Napier
University, United
Kingdom
DAVID
BEN-TOVIM
Flinders Medical
Centre, Australia
JEFFREY K.
LIKER
University of
Michigan, USA
5. 5www.leanmj.com | July / August 2015
NETHERLANDS: MENLO AWARDED LEAN GOLD
Menlo Logistics (Menlo), the global logistics and supply chain
management unit of Con-way Inc.has achieved a Lean GOLD
certification at its Maastricht facility for its logistics operation
on behalf of medical device manufacturer, Physio Control.
The lean certification programme acknowledges attainment
of set, globally recognised standards for lean principles
and practices. It provides companies with a benchmark
for achievements and a common roadmap for continuous
improvement and workforce development. GOLD certification
validates the process of continuous improvement as it is
applied throughout an operation and includes education
and training in all aspects of lean transformation across the
entire enterprise.
In announcing the accolade, Paul Rasmusson, physio controls
director, international operations and service, EMEA and APAC
commented, “For Physio-Control, the certification proves our
logistics for EMEA is managed efficiently and with a high focus
on continuous improvement. This can be seen clearly through
the service levels provided and the cost moving down over
time since the start in 2012. The certification means the Menlo
operation in Maastricht is managed through lean principles at
the highest level of maturity.”
Among other criteria the GOLD level assessment includes;
standardisation of processes; devotion to continuous
improvement manifested through a number of kaizen events
and tangible savings; quality assurance through root cause
analysis and problem elimination and work organisation
according to the 5S principles of lean.
The lean auditor commented on the Maastricht team, “This
group is family, as each have shared their learning while
continuing to apply the lean techniques in making the site a
true leader in lean deployment.”
USA: OIL PRODUCER GOES LEAN
Oil producer Hess Corp has turned to
lean to cut costs and boost production as
crude oil prices lag.
Used by only a handful of other oil
producers, the move has shaved roughly
$400,000 off the cost of each North
Dakota well in the past eight months,
a saving that comes even as Hess adds
more sand and frac stages on each well.
It has also sharply cut the time needed to
drill a new well.
Hess hopes to emerge from the oil price
slump stronger than peers. The New
York-based company believes by using
lean its 1,200 operated Bakken wells
can remain profitable with U.S. crude oil
prices above $40 per barrel, roughly $9
below current levels.
A Hess spokesperson also said it could go
so far as to survive with oil around those
levels for the next eight years.
“This stuff really does work
when you have a culture
that is behind it,” Hess
president Greg Hill said in an
interview. “We haven’t even
scratched the surface.”
Hill, who joined Hess from
Shell in 2009, has data to
back up his use of lean.
Since the first quarter of
2012, the company’s well
costs have dropped 47% in
the Bakken to about $7.1m.
For 2015, Hess hopes to cut that to
$6.8m.
In the same timeframe, the time spent
to drill a new well has dropped 51%.
Hess management has been encouraging
employees to eliminate waste by
focusing daily on what did and did not
work and quickly learn from mistakes.
Hess relies on Halliburton, Baker Hughes
and other contractors to perform the
heavy lifting needed to extract oil. As
part of finding what methods work
best, Hess saw using expensive ceramic
proppant as part of its fracking process
was not cost effective.
“We are more optimistic and more
excited than we’ve ever been on the
Bakken,” Hill said.
LMJLMJ
6. 6
LMJ
CANADA: LEAN COUNCIL
ACCUSED OF OVER-SPENDING
In 2014 Manitoba’s government
announced a lean council designed
to improve services while trimming
costs of government departments.
But critics questioned the results
of that quest after the 2015
budget projected a $422m deficit
and revealed $207 million in
overspending on core government
departments over the previous
fiscal year.
Finance Minister Greg Dewar noted
the council is still active. He credited
it with helping decrease the size
of the government’s office-space
footprint by 40%, which is expected
to save at least $2m this year.
The province also managed to
cut department of health costs
by $6m, though spending for that
department is still projected to rise
by 4.3% this year.
Rob Despins, chair of the lean
council, said his group has trained
and advised deputy ministers on
waste reduction measures. He
expects the cultural change will
take time to filter through the
provincial government.
“Your focus in the short-term
shouldn’t be the quantitative cost
savings you have,” said Despins.
“There’s going to be a little bit of
a lag between activity and seeing
the cost come out of your general
accounting system.”
Despins added service
improvements due to the new
system are easier to measure,
such as some billings previously
processed in 90 days now being
completed in 20 days.
Vern Campbell, who teaches lean
management principles at the
University of Manitoba and does
consulting work for the province,
explained first-year savings are a
reasonable amount given the size
of the province’s budget. Campbell
estimated a large organisation can
expect the lean process to take about
five to 10 years to trigger long-term
sustainable waste reduction.
Progressive Conservative leader
Brian Pallister said the lack of
mention of the council in this year’s
budget raises doubts it triggered the
savings once expected.
“What have they done in the last
five years? Watched waste grow,”
said Pallister. “The announcement
was done purely for show.” His
party has repeatedly called for
a 1% total expenditure cut, with
reductions varied to reflect each
department’s needs.
Premier Greg Selinger insists
his government is committed
to the process. “The lean council
is working with all members of our
public sector to find ways to be
more efficient.”
To help alleviate poverty, representatives from
MIT D-Lab and Tufts Fletcher School focus on
respectful, human-centred research practices
in global development.
When a student at the Tufts University
Fletcher School of Law and Diplomacy
travelled to rural India on a research trip
to interview farmers, she brought a nearly
200-question survey that took up to five hours
to conduct and complete.
“We were wasting hours of the farmers’
time,” she shared at the Lean Research
Lab, an event organised by MIT and Tufts.
“It was fundamentally intrusive and
disrespectful research.”
What this student described is exactly the
kind of research advocates at MIT, Tufts, and
beyond would like the global development
community to rethink and move away from. It’s
why they founded the Lean Research initiative
last spring.
Championed by faculty and researchers at
MIT D-Lab, the Tufts’ Fletcher School, and
Feinstein International Center, lean research
is defined by the group as respectful,
relevant, rigorous, and right sized; taking a
new approach to research conducted for
international development.
Nearly 40 researchers from academia,
donor agencies, and prominent non-
governmental organisations have now
signed onto the Lean Research Declaration,
showing their support for the call to
USA: LEAN RESEARCH FOR
IMPROVED INTERNATIONAL
DEVELOPMENT
7. 7www.leanmj.com | July / August 2015
If you have any news you think would interest and
benefit the lean community please let us know. Send
submissions to the commissioning editor Andrew Putwain:
a.putwain@hennikgroup.com
UK: DRUG COUNSELLORS
ACHIEVE CI EXCELLENCE
Phoenix Futures has successfully achieved five stars following its
recent Recognised for Excellence (R4E) assessment.
Phoenix Futures provides services for people with drug and
alcohol problems. It offers services within community, prison and
residential settings in England and Scotland.
Previously awarded five stars, this achievement demonstrates a
strong commitment to continuous improvement, operating at a
very high standard of performance.
Through its expertise it is able to support service users at
every stage of their recovery; this includes engagement on the
streets and in communities; harm reduction at drop in centres;
structured day programmes; residential rehabilitation; supported
resettlement and services within prisons.
Phoenix Futures also runs several unique personal development
programmes to complement its core services, which helps its
service users gain skills, confidence, motivation, and employment.
The first Phoenix House opened its doors in London in 1969,
offering therapeutic community based residential rehabilitation.
It has grown over the last four decades from a single residential
service to a national organisation with nearly 90 services across
community, prison and residential settings.
EFQM Recognised for Excellence is Europe’s leading recognition
programme for organisational performance, and forms part of the
EFQM Levels of Excellence.
improve research practice and intent to incorporate lean
principles in their own research work.
After a few days of surveying, the researcher who shared her
example from India became frustrated and uncomfortable
asking farmers so many questions. She took the survey back
to her research team with a request to cut the survey down.
And she didn’t stop at having a question cut here and there.
Together, the research team brought the survey completion
time down from five hours to two.
“The type of data we ended up collecting was probably as
good as what we were seeking in the first place,” she said.
Examples were shared by nearly 50 academics, researchers,
practitioners, and donors from leading institutions in
international development who came together for last
week’s Lean Research Lab, the second convening organised
by the MIT and Tufts Lean Research initiative.
At the event organisers introduced the lean research
framework and engaged participants in a series of sharing
and learning exercises. They also released a draft working
paper on lean research for public comment and provided
opportunities for further engagement after the event.
8. I N T R O D U C T I O N
W R I T T E N B Y P A U L H A R D I M A N
8
and social care policy, has published
a report proposing the NHS needs a
special kind of leadership - The practice
of system leadership, being comfortable
with chaos, by Nicholas Timmins. He
explains a critical skill for the NHS’s future
is the ability to work across services
and organisations to meet the complex
needs of those who rely on different
agencies. This echoes an offering from
the prestigious Harvard Medical School
where the Safety, Quality and Informatics
Leadership one year programme
develops participants’ knowledge of
safety, quality and informatics together
with the leadership skills for effecting
change. Unsurprisingly this programme
involves each participant delivering a
palpable improvement project.
Several commentators have suggested
complex adaptive systems theory is
an aid to understanding changing
the NHS. In order to change the
organisation’s inertial momentum, a
massive and sustained intervention is
needed at every possible level until the
phenomenon of learning excellence
emerges and sustains itself. This doesn’t
mean currently, unlike the US, lean
thinking has no profile in UK healthcare.
There were 100 entries for the 2014
Lean Healthcare Awards sponsored
by the Lean Healthcare Academy,
for example.
In the wake of the mid-Staffs scandal,
David Cameron asked Don Berwick,
a US expert in health systems
development to report to him on
patient safety (Berwick has also advised
Blair and Obama.) Berwick explained
reduction of patient harm requires
clarity and constancy of purpose among
all leaders, from the front-line to the
Prime Minister. Furthermore leaders
need first-hand experience of how
systems work at the front line. Berwick’s
stress on constancy of purpose and
senior management experience of the
front line will come as no surprise to
readers with experience of classic lean
implementations in manufacturing.
Indeed, a couple of years earlier Dan
Jones had reviewed his experience of
working on lean projects in the NHS and
had come to a similar conclusion.
The strategic issue for the NHS is how
the leadership lessons, capabilities
and organisational learning from
successful lean projects in the sector
can be rapidly spread much more
widely across the whole system?
This approach is almost certainly
unavailable in other parts of the public
sector which must absorb the full force
of the planned public expenditure
reductions. In those areas there will
be no absolute increase in expenditure
as is the case in the NHS and there is
little evidence lean has made the same
progress in other parts of the public
sector it has in the NHS.
W
ith the Conservative election
success, attention is focusing on
the substantial public
expenditure cuts the Chancellor has
already announced and the detail of
which will emerge in the June budget.
While we know the National Health
Service (NHS) will get increased funding,
the five year forward vision also
proposes ambitious productivity gains.
The anticipated extra demand for
healthcare over this Parliament should
be met mostly by productivity gains with
a much smaller level of increased
funding to help make this happen.
The leadership challenges implicit in this
strategy are obvious. The Kings Fund, an
English health charity that shapes health
This doesn’t mean,
unlike the US, lean
thinking has no profile in
UK healthcare
9. PRINCIPLES
& PURPOSE
Nurse unit challenge:
Practical expansion of
best practice mindset
by implementing best-practice, and their
effective use is demonstrated by Magnet
certification. Nonetheless, changing care
standards and complex care needs present
significant challenges for staff every day.
A prime example, harried nurses and
their supporting staff have limited time to
maintain high-functioning, standardised
work environments, with responsibilities
clearly identified by each role.
N U R S E L E A D E R S H I P
C H A L L E N G E :
TriHealths’ nurse leadership challenged
each unit at Good Samaritan and
Bethesda North Hospitals to develop a
consistent approach aligning staff duties
by roles, and ensuring work spaces were
effectively organised and sustained using
lean principles.
Four were identified and, if improved,
could create meaningful impact:
R E A D A B O U T :
Ohio-based healthcare providers
How nursing care can be
improved with easy,
measurable steps
Maintaining market lead
and reputation
T
riHealth, a Cincinnati healthcare
provider is comprised of five
hospitals – including the cities’
number one and two hospitals - Good
Samaritan and Bethesda North,
a strong network of ambulatory care,
physician practices, urgent care
centres, specialty institutes, and over
12,000 employees - including more
than 540 physicians.
While accolades provide affirmation
of TriHealth’s best practices, creating
a culture where staff is empowered to
enhance processes is critical to sustain
market leadership. Success hinges on
equipping teams with lean and change
management training to sustain a forward
thinking organisation. Success begins
when care providers share a vested
interest in patient centeredness as a
guiding principle. At TriHealth, nurses
demonstrate forward thinking alignment
Lisa Humphrey and
Ryan Francis, both
senior performance
improvement
consultants, from
TriHealth join LMJ
to show how they’re
moving with lean
in healthcare.
Creating a
culture where staff
is empowered to
enhance processes
is critical to sustain
market leadership
9www.leanmj.com | July / August 2015
10. 10
N U R S I N G E F F I C I E N C Y L I S A H U M P H R E Y & R Y A N F R A N C I S
1. Reduce frequent searching for supplies
and equipment using 5S
2. Realign duties among staff so
nursing only performs tasks at top of
their license
3. Standardise roles, specifically patient
care assistants (PCAs) across all units
4. Improve unit staff communication
C O U N T E R M E A S U R E S
A C T I V I T I E S
Once formed, teams quickly collaborated
to identify key wastes to target, created
each piece of equipment, and coloured
tape and pictures were posted as visual
reminders. In another unit, the storage
room was in such disarray nurses noted
on average 10 minutes was spent
searching for supplies before determining
a particular item was not in the room.
After undergoing 5S, nurses could locate
needed equipment within seconds.
Carts used throughout the shift by each
nurse to store smaller frequently used
supplies posed another 5S challenge.
Carts were not organised, lacked
standardisation, and nurses rarely found
needed supplies. The team designated
specific supplies, set par levels, and
identified specific bins for each supply
(see figure two). At the end of the
shift, unit coordinators (UCs) audited
each cart to ensure compliance. This
countermeasure alone saved one unit five
hours per day. 5S activities on all units
drastically reduced time and frustration
associated with finding resources, and
allowed caregivers to spend more time
with patients.
R O L E
S T A N D A R D I S A T I O N
A key goal aimed to increase time for
RN and PCAs to perform bedside care,
and align roles and responsibilities for
RN staff to operate at the highest skillset
of RN licensure. Each unit realised RNs
were performing many duties that
could be shifted to the PCA, and many
duties lacked standardised work. Teams
Figure one: Before and after 5S
Figure two: Med cart reorganisation using
5S, before and after
Figure three: PCA responsibilities by shift
countermeasures, and presented each
countermeasure to all peers for feedback
and buy-in prior to piloting. A team was
led by the lean facilitator simultaneously
at both hospitals. After five weeks, the
facilitator moved on to the next two
teams, until all 10 medical-surgical units
had undergone lean efforts. Solutions
developed by one team were carried
forward to subsequent teams to provide
standardisation across the service line.
5 S A C T I V I T I E S
Among all work activities,
countermeasures prompted by 5S
activities created quick-win appeal,
providing teams with feedback their
efforts created meaningful results. When
assessed by staff during the waste walks,
teams were often surprised at wasted
time and travelling associated with the
search for frequently needed supplies
and equipment. For example, nurses in
one unit spent over one hour per day
searching for the patient vitals machine.
Standard locations were designated for
Communication
in patient care units are
normed and staff do
not realise the negative
impact of uncoordinated
information sharing
11. During
waste walks,
teams were
surprised at
wasted time
and travelling
associated
with the search
for frequently
needed
supplies and
equipment
PRINCIPLES
& PURPOSE
created detailed standard lists of PCA job duties to be
completed hour by hour (see figure four). Standardising
work by hour of day also had an unexpected impact.
When PCAs ensured all patient needs were met at
the end of the shift, the next shift could get all start-
of-shift work (such as assessments and medication
administration) completed without interruption from
patient call lights. This inevitably served to ensure
the patients’ needs were met and medications were
administered without delay.
C O M M U N I C A T I O N :
Communication pathways in patient care units are
normed and often staff do not realise the negative
impact of uncoordinated information sharing. For
example, one unit sent patient call lights to PCAs the
first half of shift and to RNs the second half, so each role
would have uninterrupted time to perform tasks. Until
performing their waste walk the staff did not realise the
number of interruptions this process created. Often,
patients required immediate care only provided by the
person not overseeing call lights at that moment. As
a countermeasure, the unit reorganised the call light
system to have the UC receive all patient call lights and
route to the appropriate staff.
Additional issues raised by most units
centered on PCA habits to hand-write
vital sign and blood sugar results on
paper instead of immediately entering
it into the electronic medical record.
This wasted RN time in tracking down
the PCA to get the results each time
they gave medication (see figure four).
To improve, units standardised the
expectation for all PCAs to document
results in real-time, and realised
increased efficiency in daily work.
R E S U L T S A N D
L E S S O N S L E A R N E D :
The lean projects across all units
converted over 49,000 hours of staff
time from non-value added to value-
added, representing over $1.6 million in
salaries. Figure five outlines savings by
countermeasure and nursing unit. The
following represent key learnings worth
sharing for other teams beginning a lean
review of nursing units:
Teams embarking on this type of
project must educate staff in change
management and lean methods to
avoid staff jumping to conclusions and
to create meaningful change
The ability to improve work areas
depends on team buy-in to want an
enhanced state; the process owners
must help create the solutions. Tell
them the general needed outcome, but
let them find out how to get there
Managers must make a significant
time investment in communicating
and follow-up monitoring for staff
behaviours to become solidified
Healthcare must embrace lean
methodologies. We lag other industries
and efficiency gains are needed to
operationally align with payment
reform initiatives.
11www.leanmj.com | July / August 2015
Figure four: Infrequent VS/BS
documentation by PCAs and impact on RN
medication dispensing
Green boxes =
Avoidable waste if PCAs
frequently Document
VS/BS
Figure five: Nursing efficiency: Hours and dollars converted to value-add
12. 12
LMJ delves into the world of all things
CI, LSS and efficiency to see what the hot
topics are. Agree/disagree? Feel we’ve
missed something obvious? Get in touch
and air your voice.
Top 8
burning
issues
in lean
1 . A U S T E R I T Y :
After the Conservative’s recent election victory here
in the UK, we were promised £12bn worth of cuts
and savings made to the welfare budget. With lean
still often seen as nothing more than a euphemism for
making redundancies, will we see ‘efficiency’,
‘cost saving’ and other terms trotted out during
this process?
In this month’s issue we spoke about austerity and the
changes it’s brought to the civil service with several
government workers, but were continuously told the
articles couldn’t go ahead unless, we removed all
mentions of austerity and the ‘top-down’ government
enforced ideas on lean.
We can’t say if those were because of nervousness
about elections, or if they didn’t want their efficiency
programmes being mentioned in the same breath as
austerity, but it points to a worrying trend of lean as a pure
money saving operation.
2 . E N G A G E M E N T :
The fact lean is still not associated with staff
engagement is an annoying problem we must tackle.
Lean removes the stressful, frustrating, and just plain
pointless, time delays that make every one’s working
day, well, work.
If we focus on listening to staff and encouraging
participation it will be better in the long run.
3 . T H E R O L E S :
Related to this is a pressing problem that occurs in every workplace
globally; namely no one actually understands anyone else’s job in
their company.
“What does he/she do all day?” is something we all hear. It strikes of
misunderstanding, ignorance and sometimes, hostility. Workload, credit
for a job well done, and - even worse - pay disparity, are often at the basis
of it. One way of creating a more harmonious, and therefore efficient,
workplace is to all sit down and discuss what each person’s role is.
Not only will this then lead to less office-corner gossiping but it’ll help
create a more productive workforce: no longer will you have to dither
with a customer on hold as you have to ask which of your colleagues does
exactly deal with the query you’ve been landed with.
It will build inter-relationships department, encourage more
communication and open up a door to more business. How many business
opportunities have you missed out on over the years because you weren’t
even aware someone in your organisation delivered the good/service a
potential client was after?
13. PRINCIPLES
& PURPOSE
In this month’s issue we spoke
about austerity and the changes
it’s brought to the civil service with
several government workers
4 . B A C K O F F I C E L E A N :
Factory floors have been leaned to the hilt. If there
are factories out there that haven’t been leaned, we
wonder if they’ve been under a rock.
But the latest phase is to go back office. At LMJ we
fully support this, as it’s not fair for the workforce to be
sending out products at huge quantities and quality if the
company’s administration practices means they can’t be
paid on time, for instance.
5 . I T :
A huge potential area for lean. The struggles we all
have of (usually outsourced) IT related issues.
IT is growth industry like no other, and as the profligate
continues, lean has to show it can modernise and look
forward with the best.
Not to mention those gremlins that effect IT issues are ripe
for the low-hanging fruit lean loves to tackle. Other areas
desperately in need of a leanisation: train companies and
internet providers (anyone got any ideas as to why it takes
six weeks to set up a new connection?).
6 . C O N S U L T A N T S :
Look, we have no issue with them here at LMJ (we
rely on them to provide content), but there are a lot
of people out there who just want to make money
off lean. During the recent Lean Top 25, several of
those nominated spoke wearily of their involvement
in lean and how they were hesitant to say if this
was a positive.
There is an industry built on coaching and engagement,
and while the end results of this are usually beneficial to
the company, it’s no secret 80% of lean transformations
fail. Some of the most successful lean operations LMJ has
visited in the recent past have had no consultants involved
at all. Just one diligent employee on a mission, or a group
of passionate employees bending their colleague’s ears
until they listen to their ideas.
We don’t believe consultants should be ignored, or that
they don’t provide invaluable services, but the sheer
volume of cannot be efficient. Companies should put in
some serious thought to their own intentions and needs
before they engage their services. A fresh set of eyes can
be a bonus but often they can make changes on their own
without any need of a third party.
7 . A C A D E M I C - I S A T I O N :
Lean in schools. Teaching lean. Lean for the youngens.
It’s great lean and other continuous improvement ideas
are coming to those people still in education before
they’ve hit the workforce (see our May issue for more on
this), but it’ll be interesting to see which way the creation
of ‘lean academic programmes’ takes. Whilst they are now
taught as masters programmes, lean in senior secondary
schools could be more vital.
And what of the teaching procedures of lean? What
aspects do we want to focus on? Should we treat lean
as a science? As a tie-in to a business course, like a
management studies module? Or another way, focusing
on people in a psychological way might be a chance. But
will this be for the good of lean’s reputation?
8 . G L O B A L I S A T I O N A N D
C U L T U R A L B A R R I E R S :
Recently discussed in our June issue, on the topic of
National Instruments Hungarian manufacturing facility:
American positivity and optimism mixed in with
eastern European rationalism. It proved a bumpy ride.
Lean originated in Japan, a deeply conservative society,
but often countries around the world don’t take well to
questioning traditions and authority. Hierarchies are in
place for a reason and people turning up to the workplace
and demanding communication and openness became the
way forward, are often seen as rude.
Lean must weave through diplomatically and make sure
it doesn’t create a hegemony and can respect cultural
differences, while also leading the chorus for change.
It’s great lean and other
continuous improvement ideas are
coming to those people still
in education before they’ve hit
the workforce
13www.leanmj.com | July / August 2015
14. 14
Thomas Bertels, the managing partner
of Valeocon Management Consulting
and Charles Depasse, the former head
of HR and operations for Nycomed
explore the strategies needed for a
successful company.
A roadmap
for developing
functional
strategies
C
orporate strategies are important to define the
overall direction for an organisation. But how
do we make sure the strategies for the various
functional areas (manufacturing, human resources) are
aligned with the overall direction of the firm as usually
defined by its corporate strategy? This article describes
an approach for formulating a strategy for a functional
area that is developed and owned by the functional
leadership team and helps address the key question:
How do you create a functional strategy that effectively
supports the corporate strategy while also achieving the
specific operational objectives the function is expected
to meet?
A L I G N M E N T A N D O W N E R S H I P
The reality in most large organisations is the strategies for
the various functional areas are rarely well aligned with
the overall corporate strategy and other functions. Not
only does a lack of alignment result in wasting resources
on activities and projects that do not support the overall
strategy, but in many instances the lack of alignment can
hinder the execution of the overall corporate strategy.
The process presented here includes both developing the
functional strategy, and ensuring its execution.
By actively involving the functional management in the
development of the functional strategy, key managers of
R E A D A B O U T :
Developing corporate strategies
KPIs and the need for a good
HR department
Getting input from the
right people
15. PRINCIPLES
& PURPOSE
The reality in most
large organisations
is the strategies for
various functional areas
are rarely aligned with
the overall corporate
strategy
that function take ownership of specific
work streams and initiatives, ensuring full
commitment during execution.
The main stakeholders, e.g. the CEO,
peers and other internal customers
give their input as to ensure the
function is fully geared to meeting their
key expectations.
F R O M C O R P O R A T E
S T R A T E G Y T O
F U N C T I O N A L
O U T C O M E S
When developing a functional strategy
different sources of information can
be used. In most cases the corporate
strategy is the first input. In addition
stakeholder surveys as well as
benchmarks or SWOT analysis can
be used.
The key is to ensure the expectation for
the function is clearly defined as to meet
the expectations of its main customers.
Take the example of a corporate HR
function in a mid-size pharmaceutical
company: The corporate strategy outlines
six strategic objectives. What is the
contribution HR needs to make to support
the overall strategy?
On the left the corporate strategy, on
the right in the corresponding human
resources strategy that was developed
In the above example, through the HR
strategy development, the apparent
contradictory role for HR to support
both emerging markets expansion
and mature markets consolidation was
clarified. Training in project management
and building partnering skills to
support was prioritised to support the
corporate strategy.
S O L I C I T
S T A K E H O L D E R I N P U T
Getting input from the CEO and peers on
the leadership team is crucial not only
to define the expectations, but also to
ensure stakeholder buy-in and support.
Asking what works and should be further
pursued, what new activities should be
pursued can yield crucial insights on
where to focus.
15www.leanmj.com | July / August 2015
Figure one: HR functions
Figure two: Satisfaction with services received from HR
KPIs are critical
to track progress
against the overall
strategy and to help
those leading initiatives
keep score on how
they are doing
16. 16
D E V E L O P I N G F U N C T I O N A L S T R A T E G I E S T H O M A S B E R T E L S
function, prioritise the options and ensure buy-in for the
chosen initiatives.
Figure three outlines the framework used to evaluate the
relative importance and customer satisfaction impact
and identify the vital few initiatives the HR function
should undertake.
Note in the above how employee branding is positioned
low on the chart. Before this functional strategy exercise
In the example of the HR department,
the vice president responsible for HR
launched a general employee survey to
assess to what extent the function was
currently meeting employee expectations
as well as identify specific gaps that
needed to be addressed. The general
survey helped to identify specific areas
that needed to be addressed.
Gathering these inputs helps to ensure
the functional strategy is grounded in the
current reality.
D E F I N E S T R A T E G I C
I N I T I A T I V E S – M U S T
A C H I E V E S
When it comes to functional strategies,
there is typically no shortage of ideas for
what could be done. But oftentimes there
is only limited capacity to execute on all
the ideas.
Focusing on the must-achieves based
on stakeholder input was found crucial
to focus on the right things and avoid
resource drain.
A strategy development process also
provides an opportunity to challenge
the work currently being done by the
Figure four: Current perception of HR
Figure three: Framework of importance
17. PRINCIPLES
& PURPOSE
Creating
KPIs and
setting up
feedback
mechanisms
helps to
maintain
alignment and
track progress
was done, it was one of the main activities the HR
function wanted to engage in. With the insight of this
analysis the HR function could refocus on items of higher
importance to employees.
C H A R T E R I M P L E M E N T A T I O N
P R O J E C T S A N D A C T I O N S
When it comes to defining the actions, the ‘who’
is as important as the ‘what’. At its best, strategy
development is an invitation to lead – by asking:
“Where can you contribute both in your current role
and through project work?”
The preferred way to achieve this is to make the strategy
development a team effort by involving the management
team of the function and to have each member take
personal responsibility for an initiative and
to seeing it implemented.
These initiatives should come in parallel
to the normal delivery activities of the
function, and should require no or very
little additional resources, thus fitting
within the existing budget.
Some of these initiatives might be of
a limited time to a few months while
others could become part of a continuing
improvement programme.
A G R E E O N
P E R F O R M A N C E K P I S
KPIs are critical to track progress against
the overall strategy and to help those
leading specific initiatives keep score on
how they are doing. Figure four shows
the framework used for assessing the
progress made in improving how HR is
being perceived by the business.
C R E A T E A F E E D B A C K
P R O C E S S
Developing a functional strategy aligned
with the overall needs of the business is
one thing. As the business develops and
circumstances can change over time,
maintaining alignment is important.
In addition to a robust set of KPIs, a
business steering committee can be a
very effective mechanism to maintain
alignment and gather feedback. If the
functional area has multiple layers
(for example global, regional, local),
creating a forum for the entire functional
community is also a good option. Figure
five outlines the structure used to provide
periodic feedback.
C O N C L U S I O N S
A good process for creating a functional
strategy delivers both alignment and
ownership. Figure six summarises the
key lessons learned in the process of
developing functional strategies.
Starting with the corporate strategy and
gathering input from other functional
areas defines the outcomes the strategy
must help accomplish and helps to
focus on the needs of the internal
customers. Inviting the staff to lead and
take ownership for specific projects and
initiatives is critical. Creating KPIs and
setting up feedback mechanisms helps to
maintain alignment and track progress.
17www.leanmj.com | July / August 2015
Figure six: Things to remember
If you don’t have clarity about the
overall business strategy - get it.
Get feedback from your peers on what
is working well and what isn’t.
Clearly define a functions task and
measurable outcomes.
Link your functional vision to the
company’s vision and mission.
Co-create the strategy with your direct
reports to build the team, create ownership
for implementation and identify stars.
Figure five: Outlines the structure used to provide periodic feedback
18. 18
Max Cardew is a
senior manager of
business productivity
improvement with
the Commonwealth
Bank of Australia.
He comes back to
LMJ after his articles
last year on the role
of lean in financial
organisations.
L
ean six sigma (LSS) initiatives
experience a number of
challenges when deployed
within knowledge management
processes, with operational risk being no
exception. One major hurdle is the
significant variation with interpreting risk
ratings and control classifications, which
are then officially recorded in the
enterprise risk management system.
This variation on its own does not
necessarily impact the corporation’s
customers directly, however, there are
substantial maintenance, governance
and reporting regimes hanging off the
back of these all-important decisions.
One of the first activities with any
process improvement programme is to
understand the degree of concurrence,
this usually confirming the prevailing
inconsistencies. Interestingly, the risk
community are fairly accepting to this
variance and consider the risk rating
process as more of an art than a science.
Some of this variation can be explained
through the seemingly high amount
of discretion our well-intended
risk practitioners are given when
identifying, rating, and classifying risks
and controls.
The doctrine of behavioural finance-
a relatively new field that seeks to
combine behavioural and cognitive
psychological theory with conventional
economics and finance to provide
explanations for why people make
irrational financial decisions- also
supports this hypothesis from research
in risk perceptions, describing how
people invariably overestimate the
likelihood of an event with which they
have some familiarity. In comparison,
19. PRINCIPLES
& PURPOSE
Conducting a
bowtie analysis
is simple and
intuitive
with an alien event, individuals will
extrapolate from known situations
to estimate unknown ones. Further
studies have shown experts are often
overconfident in estimating accurately
from small data samples.
In an attempt to overcome these
biases and variations introduced by
human judgment, some corporations
have flirted with a number of more
scientific approaches, such as Bayesian
theorem - which tells the probability
you may experience an outcome (either
wanted or unwanted), given some
other event (directly or indirectly) has
happened, in order to assess their risk
exposure. However, these continue
to receive mixed reviews due to the
fact they become too academic and
complex for the risk practitioners who
manage these dynamic risks on a day-
to-day basis.
Nevertheless, in the words of the
prominent management consultant
Peter Drucker, “You can’t manage what
you can’t measure”. Therefore, the
profession is forced to explore other
more practical options to provide
predictive and severity qualities
without requiring all operational
risk practitioners to need actuary or
statistical qualifications.
With limited viable alternatives, the
risk community tends to default to
our ol’ 5x5 matrix, where risks are
tested against a scale to identify the
degree of exposure (likelihood vs
impact scoring), and as a consequence,
potentially entertaining all the unwanted
judgemental flaws mentioned above.
If precision and consistency is important,
we must question whether this
variability is purely a result of the risk
practitioner competencies or some other
influencing factor.
The quality guru W. Edwards Deming
argues 94% of the variation belongs
to the system (process) and only 6%
is unique to individuals. I believe this
philosophy is also equally applicable in
the knowledge management space.
Fundamentally, operational risk
management sets about identifying the
key risk(s) within a business value
chain to conduct a form of a ‘pre-
mortem’ on the speculative event. This
involves identifying and articulating the
possible sequences of events leading
to and/or the consequences resulting
from the main event. Followed by
answering the question of what can be
reasonably done to prevent or minimise
the impact.
As mentioned above, when rating risks,
left to their own devices individuals may
be quick to jump to their preconceived
overestimated familiar perceptions in an
attempt to minimise cognitive effort.
But how do you leverage the valued
expertise to build a reasonable case
for managing the risks without those
unwanted biases?
One solution would be to extract all
this tacit knowledge and replicate the
mental image in an explicit, logical
format. Then go one step further,
illustrating this ‘pre-mortem’ thought
process so other opinions can be made
and taken into account.
The tool purpose-built for risk
practitioners to manage and mitigate
high risk situations is commonly
referred to as the ‘Bowtie’ – originally
created for the oil and gas industry
during the 90’s but has all the qualities
to be equally effective across multiple
business segments.
With its roots buried deep within
decision sciences- which takes in risk
management, decision making under
uncertainty, statistics and forecasting,
operations research, negotiation
analysis, and behavioural decision
theory- a Bowtie analysis is designed
to describe and investigate causal
relationships within even the most
complex high-risk environments.
Surprisingly, conducting a bowtie
analysis is simple and intuitive - all
required is some basic business
background, good risk stakeholder
representation and a confident facilitator
to follow 15 logical steps:
1 The first activity is to identify the
risk to be managed. This would
19www.leanmj.com | July / August 2015
20. 20
B O W T I E A N A L Y S I S M A X C A R D E W
9 Test the logic on the impact chains by
retrospectively challenging the sequence with
‘because’ from the objectives being impacted
back to the main event.
10Have the team identify the worst-case chain of
events should this risk materialise.
11Using the collective wisdom of the team, the
risk can now be rated by referencing the most
probable chain(s) of events against the likelihood
scale of your 5x5. Similarly, the worst-case impact
chain identified previously can be rated against
the impact scale.
These steps have produced a comprehensive and
documentable illustration of the risk’s inherent
characteristics. The remainder are where the tool takes
the risk management process into a new level even the
most sophisticated computation fails to deliver.
12Identify the control regime available to manage/
mitigate this risk and map them according to
where in the bowtie they operate (figure one).
13Have the team rate how effective those controls
are with reducing the likelihood or impact
of event chains – especially those mapped to
the ‘most-probable’ and ‘worst-case’ chains
identified earlier.
14Leverage this new knowledge by re-rating the
risk using your 5x5 matrix (residual risk rating).
15Key controls can be clearly expressed as those
providing the most support on those ‘most-
probable’ and ‘worst-case’ event chains
The Bowtie approach has multiple advantages with
respect to variation.
Firstly, it removes the mystique of risk management by
presenting all the characteristics of the risk in a logical
order so even the totally uninitiated can appreciate the
story and formulate their own opinions. Documentation
of the event will also provide a valuable audit trail.
Secondly, these opinions can now be discussed in an
open forum to gain a collective and therefore more
consistent view of how to rate the risk under review.
This lessens the impact of unwanted biases being
introduced into the decision process. There is strong
empirical and theoretical evidence that the benefit of
aggregating different forecasts for the single event,
reduces the forecast error by about 15 to 20%.
Finally, the approach provides more confidence when
reviewing the aggregated corporate risk and control
regimes. The group based approach not only reflects
be similar to the evaluation
made by a risk practitioner when
assessing the business unit (BU)
value chain in order to identify
key risk(s). Typically, these would
describe the first thing you would
notice should the unwanted
event materialise e.g. “Failure to
report breach”.
2 Engage with those BU leaders
who would be impacted by this
event and identify their high-level
business objectives. These could
be fairly general statements such
as ‘grow wallet share’, and/or
‘grow customer wealth’, etc.
3 Identify those stakeholders
associated with the risk to
represent their interests in the
Bowtie workshop. These should
range right across the BU value
chain – especially ensuring
representation from the BU that
would/could be impacted.
4 Arrange the workspace of the
Bowtie by firstly placing the risk
of interest (the main event), in
the middle of the workspace and
arranging the BU objectives down
the far right-hand side.
5 Begin the workshop on the left-
hand side of the risk by employing
the ‘5 Why’s’ root cause analysis.
These chains of events will fan out
until the likely cause is outside
their sphere of control, or it
‘just is’.
6 Test the logic of these causal
chains by retrospectively
challenging the sequence using
‘therefore’ from the root cause
back to the main event.
7 Have the team reflect on all
the causal chains of events and
identify the most likely one(s)
given what they know today.
8 Continue with the right side of
the main event identifying the
possible knock-on events (reverse
fish-bone), until there is a direct
line of sight to those BU objectives
identified earlier.
The
Bowtie
approach
has multiple
advantages
with respect to
variation
21. Bowtie
analysis is
not rocket
science, as a
matter fact, this
qualitative tool
is not scientific
at all
a truer representation of the individual risk, it is
also provides a good gauge of the risk culture with
ratings formed by collective rather than a collection of
individual’s opinions. With so many benefits, why isn’t
every financial institute employing a Bowtie analysis?
Apart from the obvious naiveté challenge, there may be
two other reasons why our Bowtie fails to be the hero
tool in the practitioner’s repertoire. One stems from
creating a bowtie workshop event and the other to do
with conducting it.
Dealing with low probability events fosters a relative
high degree of apathy resulting in low BU engagement
to the processes of delivering risk management.
BU’s would prefer to stick with what they know best
in creating value and outsource the administration
component of risk to the risk experts – which includes
this rating and categorisation process.
Furthermore, it is a hard sell for risk practitioners to
request several business representatives to participate
in a three-four hour workshop in order to improve
standardisation and risk rating accuracy, especially
when they believe they are already working well
within their risk appetite.
With respect to the actual bowtie workshop, put a
hardened risk practitioner out in front and the tenor
of interaction changes immediately - people become
courteous, compliant and cautious. A toxic cocktail to
fire hose any collaborative working environment.
In summary, key risks within a corporation are finite and
so are the limited resources available to manage them.
But ask any organisation that has recently experienced
a major incident whether they wished they spent more
time understanding their exposures and you will get the
obvious response.
With respect to the quality of information they provide,
a corporate-wide bowtie deployment programme is a
relative inexpensive alternative to driving precision and
consistency within risk management. The reluctance
of BU active involvement is false economy when you
consider the amount of effort involved
soliciting opinions, walking the risk
through administration process and
socialising/justifying the outcomes.
This is especially so when considered
in conjunction with the misappropriation
of resources resulting from any
individual misjudgements.
The challenges of conducting a
successful Bowtie analysis can be
overcome by either providing basic
workshop facilitation skills, or leveraging
the resources within similar corporate
strategic initiatives such as LSS. LSS
practitioners not only have a good
appreciation of the tools’ basic building
blocks but the added advantage of
impartiality - freeing the practitioner to
actively articipate as the risk expert.
Bowtie analysis is not rocket science, as
a matter of fact, this qualitative tool is
not scientific at all. There would be no
two bowties alike but the methodology
ensures each risk story has considered
content - minimising the variation and at
least elevating the rating/categorisation
process from an ‘art’ to a ‘craft’.
21www.leanmj.com | July / August 2015
C=Riskcauses
E=Riskevent
I=Riskimpacts
C
C
C
C
E
E
E
C
C
C
E
E
E
E
E
PRINCIPLES
& PURPOSE
Figure one: Example of the Bowtie format:
CNTRL A CNTRL B
F U R T H E R
R E A D I N G :
W. Edward Deming, Out of
the Crisis.
Daniel Kahneman and Amos
Tversky, Prospect Theory: An
Analysis of Decision under Risk.
Nate Silver, The Signal and
the Noise.
22. 22
KTPs:
Generating
innovation in
lean programmes
Mike Wilson and Andrew Lahy of Panalpina, together with
Professor Aris Syntetos, who chairs operational research
and management, and Nicole Ayiomamitou, a knowledge
transfer associate, share how the company’s lean approach
has benefited from a wave of innovative ideas stemming
from a KTP (knowledge transfer partnership) with the
University of Cardiff.
C A S E S T U D Y P A N A L P I N A
I
n 2011 Panalpina, a logistics and
freight forwarding company operating
in more than 70 countries worldwide,
hired Mike Wilson to launch a new logistics
product to complement the company’s existing
air and ocean services. Mike, with his
background in manufacturing, was keen to put
lean at the heart of the new logistics strategy
but was also determined not to simply rehash
the same top-down lean approaches many
companies adopt.
As Mike explains, “We saw lots of companies
blindly copying lean ideas from Toyota or
Motorola without really understanding
the underlying concepts of lean. We were
determined to do something different – both
in terms of our new logistics offering and in
terms of developing a new approach to lean
in our industry.”
Mike decided to go back to the fundamental
principles of lean, and, before launching
the new lean programme, insisted the
management team read The Machine that
Changed the World and come back to him
with ideas.
R E A D A B O U T :
What is a KTP?
How Panalpina used them to
great effect
How your organisation
can get involved in this
innovative scheme
W H A T I S A K T P ?
A KTP is a knowledge
transfer partnership, in
which a company and a
university identify a
problem, and work together
to develop innovative
solutions that benefit the
company and generate
further research.
Typically, the business and
the company jointly recruit
an associate, who then works
full time at the company but
collaborates closely with and
is employed by the university.
KTPs generally last
between three months and
two years and are funded by
the UK government and by
the company.
W I N – W I N –
W I N – W I N :
The benefit for the company
is it gets access to the latest
research and the leading
thinkers in the chosen field.
The benefit for the
university is it has the
opportunity to test and
develop its research in a
live environment and can
demonstrate impact.
The benefit for the
candidate is he or she gets
to learn from the academic
experts while at the same
time applying the knowledge
in the business.
Lastly, the UK government
and the economy benefit, as
KTPs often generate
new business models that
create employment and
business growth.
More information on how to
apply for a KTP and funding
can be found at
ktp.innovateuk.org
23. free up cash and improve service levels,
we could truly embrace lean principles
and offer an innovative logistics solution
to the market.”
But because no one had ever
considered the question of how a
logistics company could help customers
reduce inventory levels, Panalpina didn’t
know where to begin.
T A P P I N G I N T O
R E S E A R C H A T C A R D I F F
U N I V E R S I T Y T O S O L V E
T H E D I L E M M A
In the end it took a chance meeting
between Mike and the academic team
at Cardiff Business School, where
Mike outlined the dilemma above.
Aris Syntetos, chair in operational
research and operations management,
recognised the business problem but
also saw the potential for original
research in the concept.
With the help of Pauline Found, senior
lecturer at Cardiff Business School,
the team decided to launch a two-
year knowledge transfer partnership
A L E A N D I L E M M A
Going back to the original concepts of
lean raised a lot of questions and left the
logistics team with a dilemma: one of
the key concepts of lean is to eliminate
inventory and storage.
How could Panalpina offer a new
logistics service providing customers
with warehouse space (which is
wasteful) while fully embracing the key
principles of lean?
Most companies face this kind of dilemma
when they look at the key lean concepts – leading
some to conclude lean won’t work for them. More
typically, companies carry on with lean and ignore the
parts that don’t suit them. Panalpina was determined
not to do this – so instead of adapting lean to fit the
business model, Mike adjusted the business model to fit
lean principles.
Immediately this sent the team in a new direction. They
had to find a logistics solution that didn’t rely on selling
storage – one of the seven wastes in lean. “We had to
do a lot of thinking, but eventually we came up with the
idea of designing a solution to help customers increase
flow, reduce inventory levels and shrink storage
requirements,” Mike explains. This seemed counter-
intuitive at first, since most logistics companies like
inventory – more inventory means fuller warehouses.
However, as Mike points out, 3PLs that focus on filling
warehouses aren’t really helping their customers
optimise their supply chains.
As the idea developed, the team began to look at ways
to help customers reduce inventory and create flow
in their supply chains. “We realised we had a wealth
of information about our customers’ supply chains we
were doing very little with,” Andrew Lahy says. “If we
could use this data to help customers reduce inventory,
CASE
STUDY
We saw
companies
blindly
copying lean
ideas from
Toyota or
Motorola
without
understanding
the concepts
of lean
23www.leanmj.com | July / August 2015
Nicole presented the new
D2ID model to students at
the university – providing the
students with access to the
latest business research
D E M A N D D R I V E N
I N V E N T O RY
D I S P O S I T I O N I N G - D 2 I D
D2ID is a sales and inventory forecasting
approach Panalpina developed as part of its lean
continuous improvement programme.
Now the company can help its customers
improve sales forecast accuracy, calculate
optimum service levels per SKU and identify
excess inventory.
24. knowledge within the company of how
to forecast and optimise inventory for
our customers.”
“Even more importantly, our lean team
can now help customers reduce waste
in a whole new area – and for most of
our customers, excess inventory and
obsolescence are some of the biggest
wastes in their supply chains. Now, we
have a solution to help reduce them.”
What’s more, the new ideas and
solutions developed have spawned a
host of new business improvement ideas
and innovations within the company.
Panalpina are now looking to implement
the application across multiple sites and
help customers position inventory in
the right channel, geography and supply
chain phase, depending on the stage of
the products’ lifecycle. “At the start, we
had to help the company get up to speed
with the latest thinking on inventory
forecasting,” Aris Syntetos says. “Now
the research Nicole is working on is
pushing the boundaries of traditional
forecasting methods, and from a
research perspective, we are getting
increasingly excited about where the
ideas will lead.”
24
C A S E S T U D Y P A N A L P I N A
The
new ideas
and solutions
developed
have spawned
a host of
business
improvement
ideas and
innovations
within the
company
(KTP) because of
the complexity of
the problem and its
importance to Panalpina.
The KTP would develop a
new inventory forecasting
methodology, which
the company called
demand-driven inventory
dispositioning (D2ID).
To run the project,
Panalpina and Cardiff
jointly recruited
Nicole Ayiomamitou, a
mathematics graduate,
who had also recently
completed an Msc in
operational research
at the University
of Edinburgh. “We
deliberately decided not
to hire someone with a
logistics background,”
Andrew explains. “We
wanted someone with
a fresh approach to
our business, and with
Nicole’s exceptional
mathematical capabilities, we certainly
found a candidate with a very different
perspective on the information we had
available to us. I think if it weren’t for
the KTP, we would never have thought
to recruit someone with Nicole’s
skillset, and equally, if it wasn’t for the
uniqueness of the KTP challenge, I don’t
think Nicole would ever have thought of
applying to a logistics company.”
S O L V I N G T H E
D I L E M M A W I T H D 2 I D
By working mainly at the Panalpina
office but also spending time at Cardiff
Business School, Nicole has developed
a new solution for the company based
on advanced inventory forecasting and
planning. Panalpina now have a method
and application they can provide to
customers to assist in improving forecast
accuracy, reducing inventory levels, and
increasing service levels.
“We could have taken the easy option
and bought some software off the shelf,
but thanks to the KTP approach and a
lot of hard work from Nicole, we have
built the software ourselves,” Andrew
says. “More importantly we’ve built the
Because no one had ever considered the
question of how a logistics company could help
customers reduce inventory levels, Panalpina
didn’t know where to begin
25. Sharing the caring
SPECIAL
FEATURE
: What exactly is CQC and
what services does
it offer?
CQC: CQC is the independent regulator of
health and adult social care in England. We
make sure hospitals, care homes, dental
and general practices and other care
services in England provide people with
safe, effective and high-quality care, and
we encourage them to improve. We work
in the following ways:
25www.leanmj.com | July / August 2015
S P E C I A L F E A T U R E C A R E Q U A L I T Y C O M M I S S I O N
R E A D A B O U T :
How the complicated structure
of this organisation has
adopted lean
Working in a sensitive area
of healthcare and
community support
: What does your job
entail and how big is the
lean team at CQC?
CQC: Currently there is no dedicated
lean team at CQC. As the ICT commercial
manager within CQC,
holding a black belt
certification, my regular
job purpose is being
responsible for the day
to day management
of the ICT budget and
contract management of
ICT services and supply
contracts. The role
focuses on improving
efficiency/cost/revenue
and promoting lean
principles. The key
accountability being to ensure the
IS and ICT contracts for service and
equipment provision that underpin the
Commission’s business programme are
delivered when and where it needs them
at an affordable price.
Lean must align seamlessly
with CQC structures, culture and
management performance
reporting systems for it to deliver long
term results
The Care Quality Commission (CQC) is the
independent regulator of health and social care in
England. They inspect and regulate services to make
sure they meet fundamental standards of quality
and safety.
They inspect GP’s surgeries, care homes, hospitals,
and work with community organisations, central
and local government. Here, their ICT commercial
manager Darren Spark discusses their lean practices.
26. 26
S P E C I A L F E A T U R E C A R E Q U A L I T Y C O M M I S S I O N
Making sure services meet fundamental standards
that people have a right to expect whenever they
receive care.
Registering care services that meet our standards.
Monitoring, inspecting and regulating care services to
make sure they continue to meet the standards.
Protecting the rights of vulnerable people, including
those whose rights are restricted under the Mental
Health Act.
Listening to and acting on the public’s experiences.
Involving the public and people who receive care
in our work and working in partnership with other
organisations and local groups.
Challenging all providers, with the worst performers
getting the most attention.
Making fair and authoritative judgements, supported
by the best information and evidence.
Taking appropriate action if care services are failing to
meet fundamental standards of quality and safety.
Carrying out in-depth investigations to look at care
across the system.
Reporting on the quality of care services, publishing
clear and comprehensive information, including
performance ratings to help people choose care.
: When did CQC first begin a lean
implementation? And what were the
reasons why?
CQC: CQC has yet to commence a full lean
implementation, with myself being the only certified
black belt within the organisation. I don’t believe there is
defined reason why lean was first embraced by myself. In
my experience, I read numerous case studies regarding
5S and wanted to embark on gaining knowledge in this
area as the first stepping stone towards implementing
lean and contributing to one of CQC’s values excellence.
P O K A Y O K E , 5 S A N D V I S U A L M A N A G E M E N T
PROBLEM:
It was difficult to
locate ICT Supplier
folders.
It was difficult to
determine which
folder was being
used.
SOLUTION:
Sort folder in
alphabetical order.
Colour code each
shelf.
Apply a rising
coloured line, so
missing folders
could easily be
identified.
Create an index
document.
My reasons for this were two fold; 5S can be a stand-
alone implementation (with or without lean), and it will
most likely show the most benefit for the largest part of
CQC in the least amount of time. It can also be applied
to all areas of CQC by helping to get things organised
and keeping it that way.
: What positives has it brought and
what negatives and challenges has it
turned up?
CQC: Making service processes more lean presents a
variety of challenges. It often requires creative thinking
but old habits die hard. For instance, when paperwork
moves online, the steps of a process may still be
performed in a sequential order, even though they could
now be done in parallel. Rethinking old ways of working
can lead to fresh insights.
: What aspects of lean have been most
beneficial to the organisation?
CQC: One of the primary beneficial aspect of applying
lean within CQC has been in applying the “80-20” rule.
This being that a small percentage of work typically eats
up a disproportionate amount of time. In one internal-
support function, 75% of the transactions took less than
five minutes to process. But the remaining 25%, the more
complex transactions, accounted for 60% of the total time
expended every day.
Exceptions such as these had a huge drain on productivity
and were typical for many service processes. Once the
process work had been broken down into discrete pieces,
those pieces were measured and set performance
benchmarked. The benefit delivered was the business
function manager was able to track the actual time spent
on specific tasks, understand the drivers of productivity,
27. SPECIAL
FEATURE
Austerity
notwithstanding,
the commission
will be taking
on 500 extra
inspectors
this year and
spending £10m
on training and
development of
its 2,000-plus
staff
and fine tune their operations for far
greater efficiency and cost savings.
: What has the reaction
from the staff been?
Has there been any resistance or
misunderstandings to work through in
terms of the workforce and what
have been –if any- the recurring issues
with engagement?
CQC: Despite initial scepticism, staff now
realise many lean and six sigma tools are
quite simple to understand and easy to
apply. Furthermore, because they are
rigorous, structured methodologies the
causes, extent and location of problems
are identified using facts and data. Guess-
work under pressure is avoided in the
search for solutions.
The recurring issues with engagement
and misunderstandings have focused
on understanding the principles of lean
and six sigma. I would state lean is an
essential element of the improvement
journey. Many errors are created in
non-value adding processes. Remove the
process and you automatically get quality
and delivery improvements.
Six sigma is about reduction of variation.
You would not want to waste time and
effort on improving a process that is not
required. Organisations should first lean
their processes and then introduce six
sigma tools on value added processes.
Together they produce a very
rapid and effective framework for
QCD improvement.
: CQC is an independent
regulator: has it suffered
in austerity and has this been linked to
lean implementation?
CQC: CQC continues to change the
way it inspects at probably the most
challenging time for health and care
services in terms of demographics, public
expectations and technology – and in a
context where money continues to be as
tight as it has even.
Austerity notwithstanding, the commission
will be taking on 500 extra inspectors
this year and spending £10m on training
and development of its 2,000-plus staff,
as well as “experts by experience” (users
of services) and others from outside the
27www.leanmj.com | July / August 2015
organisation who now join its expanded inspection teams.
Rather than suffering in austerity, lean
implementation within CQC has encouraged staff
to work collaboratively and to adopt a mind-set of
being problem-solvers who can improve delivery,
productivity and efficiency. This collaboration has
enabled CQC to access the right expertise to solve
problems whilst providing staff with the sense they are
working in an environment that supports imaginative
and innovative solutions.
: Much of healthcare has been leaned,
but mostly in hospitals and backroom
departments, with such a hands on, disparate
workforce often working with carers and in residences,
does CQC have to take on unique adaptions of lean?
CQC: Lean is mostly maintained in office and not
the frontline. The implementation of a lean thinking
culture within CQC has been particularly relevant for
three reasons:
1 Cost reduction: Being at the heart of a number
of improvement programmes over the last few
years, ranging from ‘Reducing CQC’s data network
over capacity’ to ‘Improving CQC’s contract
management Systems.
2 Service protection: Focusing on what does and does
not add value for customers and improving efficiency
and effectiveness. E.g. introducing new methods to
improve financial forecasting and replace traditional
manual processes.
3 Staff innovation: Empowering staff and increasing
morale by encouraging collaboration between staff
in the design or operational improvements. This in
turn promoted a more innovation-friendly culture
and environment.
: What are the plans for the future in
terms of lean at CQC?
CQC: Lean is not merely a business improvement tool. It is
a philosophy which needs to be driven from the top team
down if it is to generate required levels of understanding
and belief. Securing such widespread commitment is
challenging, taking valuable time and as a result many
organisations end up launching their lean programme
without due diligence as ‘just another quick fix initiative’
to address the same fundamental business performance
problems. They rarely succeed.
The future plan in terms of lean at CQC will be for the
business culture to back up statements of commitment
lean with the right day-to-day behaviours and decisions
or improvements are unlikely to be sustained. Lean
must align seamlessly with CQC structures, culture and
management performance reporting systems for it to
deliver long term results.
28. Tony Mizen works for the Welsh
Government as a head of continuous
improvement and change at
Academi Wales, and has a career
in industry and government work.
He brings his knowledge to the lean
implementations of public services
in Wales.
LMJ interviewed him to see how
you go about the mammoth task of
leaning an entire country.
focusing on their quality, cost, delivery
and marketing processes to enable them
to win contracts. We also set up a number
of significant supplier development
programmes centred around Welsh-
based OEM companies.
It was around this time I did my MBA
with the Cardiff Business School Lean
Enterprise Research Centre (LERC),
and then moved on to become head
of procurement within the WDA
before heading up the Welsh
Manufacturing Forum.
In 2009, shortly after WDA merged
with the Welsh Assembly Government
I took on my continuous improvement
role. In addition, in 2012, I joined the
Board of ICiPS (Institute for Continuous
Improvement in the Public Sector) and
in 2013 become a Fellow. I am also
the chair of the All Wales Continuous
Improvement Community.
: How big is the team?
TM: I have three people working for me,
including one seconded from NHS Wales
In addition to their specific expertise they
have a raft of experience and effectively
channel their different personalities to
great effect, constantly challenging and
looking for new ways of doing things.
: Tell me about the
All Wales Continuous
Improvement Community (AWCIC)
TM: AWCIC is a democratic group
run effectively by the public sector in
Wales, for the public sector in Wales, to
encourage and enable public and third
sector organisations to exchange and
share good practice amongst themselves.
To date we have over 400 continuous
improvement (CI) practitioners signed
S E C T O R F O C U S C I V I L S E R V I C E
28
Wales: the land
of the lean
Academi
Wales is part
of the Welsh
Government
and our role
is to build
excellence
in leadership
practice across
the Welsh
public service
at all levels of
organisation
R E A D A B O U T :
How the implementation of the devolved civil
service took place
Motivations and methodologies: is it business
improvement or cost cutting?
The plans for how to improve services
: What’s your background?
Tony Mizen: I started my career working for Sony in the
television manufacturing facility in Bridgend, on the
production line. I worked my way up through quality,
engineering and finally, procurement and supply chain
management. I was involved with Japanese colleagues on
new product development and product localisation with
UK and western European suppliers.
I was at Sony for 13 years, then I moved on to work for
what was then the Welsh Development Agency (WDA)
and my role was going out working with local businesses,
helping them up-skill and become more competitive
29. We
specialise
in providing
mentoring
advice and
support,
delivering
efficiency
improvement
workshops
and delivering
a range of
training
material
up representing 85 organisations. With
a vision statement of ‘creating a critical
mass of people who can transform the
public sector in Wales’ the aims and
objectives of AWCIC are to:
Establish and promote a programme
of best practice learning and
sharing (including formal visits to
experience best practice disciplines
within public and private sector) to
date organisations visited include
Driver and Vehicle Licensing Agency,
Intellectual Property Office, Royal
Mint, Companies House, Schaeffler
UK, Airbus, Rolls Royce, Swansea
Coasting Housings, NHS, Neath Port
Talbot County Council and Perkin
Elmer. We focus on subjects such as
visual management, problem solving,
staff engagement, innovation and
ideas generation.
Establish and promote agreed standards
for CI training (ICiPS accredited).
Promote the achievements of AWCIC
through events such as conferences
and awards (Annual Standing National
CI Conference).
Identify how we might use AWCIC to
further develop thinking on difficult
issues e.g. capturing and realising
benefits. What and how should
we measure?
Use AWCIC as a mechanism to forge
closer links between policy making and
practice and to identify opportunities
to more rapidly scale up emerging
notable practice.
: In terms of the Welsh
Government, what is the
set up here? What is Academi Wales-
is it a government institution or an
independent body?
TM: Academi Wales (AW) is part of
the Welsh Government and our role
is to build excellence in leadership
practice across the Welsh public service
at all levels of organisation through a
programme of work that drives
up standards of practice, develops
skills, changes behaviour and
improves knowledge.
In a nutshell, helping people grow
through learning. Working across the
board, not just with the devolved, but
also the non-devolved (centralised)
departments and third sector
organisations based in Wales. The
individual but cross cutting strands of Academi Wales
are public service schools and conferences, continuous
improvement and change, research and development,
personal development and growth, public service
leadership and online and e-based.
I head up the continuous improvement and change
team. We specialise in providing mentoring advice and
support, delivering efficiency improvement workshops
and delivering a range of training material, accredited
through ICiPS, in fact, we’ve recently successfully
undergone an annual assessment to retain our
ICiPS badge.
Organisations we’ve worked with during the last year
include local government bodies, police, fire and rescue
service, and a wide range of other organisations, leading
public service initiatives and who deliver services directly
to the people of Wales.
: Is there pressure on you doing lean
as a cost cutting measure rather than
an improvement and efficiency matter? Do they see
you there to save pounds or do they fully appreciate
the methodology?
TM: Certainly in the early days, when there was a
combination of lack of awareness and preconceived
views of lean. Particularly from people who come out of
industry and with less positive experiences of lean based
on a blinkered mind-set of trying to squeeze the last bit
of work out of the employees.
Over the last six years we’ve gained a broad insight
into public sector organisations and my feeling is most
organisations have now gone through this phase and
have been burnt from their experiences of catching
people unaware – and are now seeing lean and CI as
more of a friend rather an enemy.
: Are these programmes now
embedded in the government strategies
of the future?
TM: I think it is probably safe to say this is the direction
public sector in Wales will follow for the foreseeable
future. It is encouraging to see evidence the levels of
capability are increasing.
Going back six years or so when I first started in public
sector lean work, it was enough at that time to go in and
talk to organisations about some of the basic principles
of lean; value verses waste, flow and identify quick and
practical to connections to identify areas where efficiency
can be made.
Now, many organisations we work with already have that
basic awareness, where we add value is by mentoring
and supplementing existing knowledge by providing
a programme of training or facilitating a workshop
designed to meet their requirements.
SECTOR
FOCUS
29www.leanmj.com | July / August 2015
30. 30
LMJ editor Andrew
Putwain visits Newsprinters
UK, the Scottish printing
presses recently awarded
the Shingo Prize.
F A C T O R Y V I S I T N E W S P R I N T E R S U K
N
ewspaper are a dying form of
media. It’s a sad state of affairs,
but the reality of our modern
era. We love our internet too much;
even the smallest publication has a
website and we rarely look to the
printed word as a first point of
reference any more (remember
phone books?).
So it’s an odd idea for one of the world’s
largest media empires to pump money
into a revolutionary facility with the
world’s largest printing press in this era
of downsizing.
But that’s exactly what News
International did in 2007. Opening their
site’s new building, which then Scottish
First Minister, Alex Salmond, called a
‘cathedral of print’.
Situated to the east of Glasgow, near
the town of Motherwell, on a rapidly
expanding business park, Newsprinters
R E A D A B O U T :
The company’s ethos that lead
to win the world’s foremost
business effectiveness prize
The principles and ideas
important to the firm
That decidedly Scottish way of
doing lean
Spreading the wordis a modern and clean building of
grandiose proportions and laboratory-
esque cleanliness and regimen.
Group continuous change leader George
Donaldson highlights the difference.
“Many printing presses in the past
were dirty, greasy, dark places.” It was
something they really wanted to avoid.
Donaldson joined in 2007 as the site
was opening, after 20 years in Canada
working at the largest printing presses in
North America, for the Toronto Star, but
chose to return to Scotland to take on
the epic task of introducing continuous
improvement to an industry entrenched
in a mindset of ‘doing what they’ve
always done’ and faced with the spectre
of its own decline.
Senior operations manager Ross
McCombe agrees; citing nepotism,
traditional outlook and the lack of
external views coming in as a reason
31. SPECIAL
FEATURE
The
epic task of
introducing
continuous
improvement
to an industry
entrenched in
a mindset of
‘doing what
they’ve always
done’
why the industry was suffering. “There
was no knowledge of their waste and
the potential they had in savings and
improvements.”
Donaldson manages Newsprinters
CI activities across its three UK sites;
Motherwell is the smallest of the
three, the others being Knowsley, near
Liverpool, which covers the centre and
north of England, and Broxbourne,
outside London, which covers the south.
Broxbourne is five times the size of
Motherwell, but can’t compete with it in
terms of CI.
“The sites all learn off one another and
the three bounce back and forth ideas.
Things pass between the sites; an idea
we had in Motherwell might go down
to London, where they come up with a
whole new angle for it, and come back
up here in a whole new iteration.”
Around 110 employees work at the
facility, mostly on a night shift starting
at seven p.m. It’s the largest contract
printer in the UK and prints many of the
nation’s most famous newspapers: The
Telegraph, The Daily Sport, Edinburgh
Evening News and the Scottish editions
of The Times and The Sun, as well a
host of private contracted works of
everything from regional newspaper to
community leaflets and fliers.
But it’s the printing press itself that is truly impressive:
the largest in the world (though not to be outdone,
southern cousins at Broxbourne, have the largest print
site in the world), that is capable of printing 86,000
copies of a 144 page newspaper in an hour; three
stories high, and a truly epic amount of machinery.
“Asset care is the very important to us,” McCombe tells
me, “Our kit can’t fail, we have no back up and with
decreasing readership there’s no room for error.”
31www.leanmj.com | July / August 2015
A N E X A M P L E O F C I I N
A C T I O N
A simple and effective use of the change
Newsprinters use was visible. Over 60 reels of
newsprint are used every day at the facility. The
person who would strip the huge reels of their
cardboard outlay and then slice through it with
a knife, after the machine had done the lion’s
share – the reels weight two tonnes and need
to be put on automated rollers to be moved – to
use the reels.
In doing so, they were on average cutting
through 15 layers of newsprint. Now, through a
series of few simple changes, they cut through
three. A waste of less than one kilogram (out of
2000). This tiny change in processes, has created
a saving of tens of thousands of pounds a year.
This has enabled them to create leaders from
within and CI co-ordinators who all equally share
in improvement.
32. 32
F A C T O R Y V I S I T N E W S P R I N T E R S U K
One of those rooms for errors is web breaks. The complicated art
of changing printing paper and products. “We like analogies here,”
Donaldson explains, “like formula one race teams have pit stops we
have line breaks for changing what we’re printing. We need a quick
change over for all our different newspapers and it’s a race every night.
We do as much pre work as possible. If we don’t get our product there
in time, there’s no way of making it up. The trucks leave without our
product.” There’s no second chance. With this it’s easy to see as why
SMED is one of the main ideas they’ve taken to heart.
Donaldson continues as we tour the facility: “It’s not just about
removing waste but a holistic approach to the business.” There are no
other CI team members, instead George has undertaken training every
single member of staff in improvement. It is has been deployed across
the group to create disciples.
The company has 12 quality processes, they refer to
as their total productive manufacturing (TPM) system
which includes all the usual parts of CI, as well as
modern elements like a passion for environmentalism.
The plan, when CI was brought in on the construction
of this new facility, was on a three pronged attack: 1)
organisation, 2) standardisation, 3) engagement. The
third is the hardest according to McCombe, who himself
had no background in CI, and explained the reaction
from the staff at the time was less than enthusiastic- to
put it mildly. The reaction used the Scottish natural
ability with swearing, and as McCombe and Donaldson
reminisce over their uphill battle, it was clear it was not
always a pleasant task.
“Printing was a historically well paid profession,
so we had a lot of lifers, who’d only ever had one
job,” McCombe tells us, “People whose father’s had
worked in printing, and who had always been in
the industry. We had a lot of people saying ‘it won’t
last’”. Donaldson laughs now, but it’s obvious it was
a little more controversial at the time, “The essence
of what we do is mindset. 80% of improvement and
change plans fail and that failure is due to a reliance
on the toolkit. We relied on an alignment of thinking.”
Bringing the whole team on board was a long hard
task but they have achieved it. “Common sense is
not always a common practice.” Donaldson states.
“Individuals are accountable; punishment as a team
does not work.”
“Now everybody knows our vision of CI. Everybody
knows how they’ve contributed to it and how they’ve
done so to the business.”
Donaldson is also less than keen on the
terminology. Why would someone in Scotland be
speaking Japanese? “We never call it the gemba.”
He’s less than impressed with hearing about
going to the gemba as an important part of a lean
transformation. “We go to the gemba every day.
Except we call it the workshop.”
“Lean is a bit like the diet industry.” He explains: Diet
lean, lean lite, fat free lean. A lot of misleading words
and people cashing in on a confusing set of terminology
that needn’t be used.
The techniques Newsprinters have used over the years
to get their results take on a bit of everything. Emphasis
is on the staff themselves which has led to just a 1%
turnover. Impressive for a firm where 60% are employed
by business partners working within the space.
But that emphasis remains: learning and development
are key and there is heavy investment for staff with
NVQ (national vocational qualifications), workshops and
importance placed on respect and humility.
T H E S H I N G O P R I Z E
Donaldson and McCombe are pleased with their win,
but were taken aback when it happened. “We had hoped for
at least silver.” When the news came Donaldson was
alone in a hotel room on a work trip, with no one to
celebrate with. Though the staff had a glass of champagne
later on his return.
They became interested in the prize whilst visiting Ultraframe
Conservatories, and after analysing the criteria saw they could
be in with a chance.
They compiled a thorough case which they presented last year.
The Shingo model is based on four dimensions:
Cultural enablers (10 principles each)
Continuous process improvement
Enterprise alignment
Results
It was Newsprinters respect for their staff and their humility
that helped them. The Shingo adjudicators who spent two
days at the site to inspect every inch of it were suitably
impressed. “They told us they’d love to work here.” It’s not
hard to see why.
McCombe (L) and Donaldson (second
from left) collect their award in Utah.
33. BOOK
REVIEW
33www.leanmj.com | July / August 2015
S P E C I A L F E A T U R E ? ? ? ? ? ? ? ? ? ?
I felt like Sylvester
Stallone in 80’s classic
Demolition Man:
arriving in a place
where human emotions
such as jealousy and
resentment are things of
the past and everyone
peacefully co-exists
Joe Bell launches the first of his
regular book reviews. As SVP
of people operations at Google,
Laszlo Bock’s book outlines how
we should transform the workplace
through the way we work and lead.
BOOK REVIEW
G
oogle. As a brand, Google has a
personality. To many it is unique,
progressive and cool. To others
it is a corporate mammoth allegedly
entangled in European tax-avoidance.
Whatever our perception of Google, it is
not dull (as compared to, say, Microsoft).
So what is it that makes Google a ‘talent
powerhouse’? In Work Rules! Laszlo Bock
provides an insight from behind the
wizard’s curtain and shares some of the
people practices in Google today.
The recommendations must be
understood in the broader context to
be considered meaningful e.g. what
can a small company learn from this?
Thematically, Bock’s book is one of
freedom, meaning and empowerment
for employees. Creating an environment
to enable this is the function of the
people operations department and Work
Rules! outlines lessons learnt and the
result of this approach. Of course the
application of his ideas within Google
may seem fanciful in a more challenging
environment but many assertions
remain valid.
The most insightful points are around
the role of managers. At one point
Google removed managers. This was in
line with enabling freedom and allowing
all Googlers to self-regulate without
any form of hierarchy. The experiment
failed and managers were reinstated
a month later. I admire the bravery –
to experiment and take action when
required – and that Google learnt from
this. Managers became accountable to
their teams and are measured against
both the execution of objectives and
their team’s perception. This has
worked for them and made the best of
an uneasy alliance. This is reminiscent
of the principle of servant-leadership
where the leader shares power, puts the
needs of others first, and helps people
develop and perform.
Giving work meaning by being
transparent in all you do (including
34. W H A T I L I K E D
Bock is passionate about
people’s goodness
Google seeks to learn from
its mistakes
An insight into Google
W H A T I D I D N ’ T
Idealistic and impractical
at times
Brain-smashingly upbeat
No meaningful surprises.
34
recording meetings for employees
to watch) and dealing with the rapid
culture-change Google’s growth created
are also interesting points. Despite little
in Work Rules! being transformative or
new, Google is clearly responsive to its
employees and they have a valued voice
and an input. This has led to innovation
and the space for great minds to breathe
and go beyond what they think is
possible. Overall, Work Rules! advocates
a culture of trust, freedom, high rates of
pay and a fantastic working environment
as key to its success.
Work Rules! is a twist on current people
practices that are up-scaled to the
Google environment. Involve/trust
employees, take action on employee
surveys, remain committed to the
goodness within people, and so on.
This is not radical or transformative, but
does sound slightly sweeter when done
in such a gold-plated fashion Google’s
endless resources allow.
Bock’s writing is relentlessly upbeat
and positive. Critically, many of Bock’s
B O O K R E V I E W W O R K R U L E S
assertions lack research – relying
on a single reference point which
can be clawing. His language also
masks traditional HR practices at
work: when faced with an under-
performer, Bock insist they should be
shown “compassionate pragmatism”
(what?) and there is often a refusal
to acknowledge human nature is not
entirely perfect. Interestingly, Google
attempts to direct employee behaviour
through ‘nudging’ (peer pressure) as
opposed to directly addressing it. This
raises interesting questions on group
culture and manipulation.
It is clear Google keenly wishes to retain
its founding principles of creativity
and non-conformity (even employing
a chief culture officer). Yet whilst
reading Work Rules! at times I felt
like Sylvester Stallone in 80’s classic
Demolition Man: arriving in a place
where human emotions such as jealousy
and resentment are things of the past
and everyone peacefully co-exists. Mind
you, if I had Barack Obama and David
Beckham popping in to give lunchtime
talks in the ever-abundant and free staff
canteen I might also believe the whole
world could operate just like this.
For further information contact
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ENTRY DEADLINE: 31 JULY 2015
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