The Outstanding Organization: The Power
of Clarity Presenter: Karen Martin March 22, 2012

 Founder of Karen Martin
& Associates (1993)  Thought leader in applying Lean to the service sector and office areas within manufacturing  Teaches at University of California, San Diego’s Lean Enterprise program  Email: karen@ksmartin.com  Twitter: @karenmartinopex Karen Martin, Principal

2012 Webinars Date Topic March
22 The Outstanding Organization: The Power of Clarity April 5 The Outstanding Organization: The Power of Focus May 3 The Outstanding Organization: The Power of Discipline May 17 The Outstanding Organization: The Power of Engagement Release Date: July 8, 2012 (McGraw-Hill) Available for Preorder: www.bit.ly/km-too 3

Success with Improvement 2001 – The Economist
70% 63% 60% 50% 40% 30% 20% 17% 20% 10% 0% None Temporary Lasting 4

…A Decade Later 2010 – Accenture
80% 70% 69% 60% 58% 50% 40% 33% 30% 20% 10% 0% Needs re‐evaluation, Minimal “Mixed” to restart or complete financial “disappointing” makeover impact results 5

To Err is Human Institute
of Medicine, 1999 Up to 98,000 deaths annually due to medical errors. 8th leading cause of death in U.S. 6

Southwest Airlines’ Boeing 737 has
137 passenger seats.
7

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To Err is Human Institute
of Medicine, 1999 98,000 lives lost Improvement Goal: Reduce by 50% in 5 years. 9

Not. Even. Close.
10

Something Is Terribly Wrong… 33%
hospitalized 180,000 Medicare patients are harmed; patients die 7% result in Progress has annually from permanent injury or been slow. medical errors. death. Journal of the American Office of the Health Affairs Medical Association 2009 Inspector General 2010 2005 Annual death 2010 No significant 2011 toll from change in rate of medical errors preventable is closer to errors. 200,000. New England Journal of Dead by Mistake Medicine Hearst Newspapers Special Report 11

What are we missing?
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We need to improve how
we improve. 13

Mindsets & Behaviors
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Lack of Clarity Lack of
Focus Lack of Discipline Lack of Engagement 15

The Outstanding Organization Business Results Problem Solving
Improvement Continuous Resilience Core Capabilities CHOS April 5 May 3 May 17 16

Lack of Clarity Lack of
Focus Lack of Discipline Lack of Engagement 17

Truth Truth Truth Truth Truth
Truth Truth Truth Truth 18

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Ambiguity Abounds… • Organization purpose
& vision • Customers & products • Business goals & priorities • Policies & procedures • Roles & responsibilities • Process performance • Problem solving & decision making • Communication 20

Who are your customers? What
problem does your good or service solve? 21

What value do these consumer
goods companies provide to their customers? 22

You must indoctrinate
all new hires into who the
organization’s customers
are and what they value.
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What is Your Improvement Strategy?
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How does work get accomplished? And well how are we doing at it? Customer Process Process
Process Process 1 2 3 4 LT LT LT LT PT PT PT PT LT = Lead (Throughput) Time PT = Process (Touch) Time 26

Key Lean Metrics: Quality •
%Complete and Accurate (%C&A) – % time downstream customer can perform task without having to “CAC” the incoming work: • Correct information or material that was supplied • Add information that should have been supplied • Clarify information that should or could have been clear 27

Processes MUST be Clearly Documented Current State Metrics-Based Process
Map PT Units Process Details Mapping Team Seconds Hours Process Name Order Fulfillment Dianne O'Shea Ryan Austin Minutes Days Specific Conditions Domestic orders through sales force Sean Michaels Mary Townsend LT Units Occurrences per Year 37,500 Sam Parks Seconds Hours Hours Worked per Day 8 Paul Dampier Minutes Days Date Mapped 26-Nov-07 Michael Prichard Step # ? 6 7 8 9 Function / Department Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT Customer Notify customer Fax PO to Sales Rep Approve PO 15 240 100% 5 20 100% when they can 15 300 95% Account Manager expect delivery Review and Account Manager approve PO; send 5 240 100% to Order Entry Enter order into Order Entry 10 240 SAP Finance / Credit

Every key process… 2-5 Key
Performance Indicators Monitored Continually 29

Gaining Clarity via Visual Management
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“Going to the gemba has been life changing for me as a leader.”
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What problem are you trying
to solve? 32

Clarifying the PDSA Cycle Phase Detailed Steps 1. Define and break down the problem.
2. Grasp the current condition. Develop Plan 3. Set a target condition. Hypothesis 4. Conduct root cause & gap analysis. 5. Identify potential countermeasures. 6. Develop & test countermeasure(s) Conduct Do 7. Refine and finalize countermeasure(s). Experiment 8. Implement countermeasure(s). Evaluate Study 9. Measure process performance. Results 10. Refine, standardize, & stabilize the process. Refine Adjust Standardize 11. Monitor process performance. Stabilize 12. Assess results. 33

Learning How to Clarify: A3
Management A3 Report The vital role of the coach/mentor 34

Progressive Learning
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Gaining Clarity: Avoid “Fuzzy” Words • Near / close / far • High / low
• Short / long • Significant • A lot / a little • Fast / slow • Many / few / much • Young / new / old • Bad / good • Expensive / cheap • Heavy / light • Long / short • Seems • “I think…” 36

Release Date: July 8, 2012
(McGraw‐Hill)
Available for Preorder:
www.bit.ly/km‐too
37

For Further Questions Karen Martin, Principal 7770
Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Twitter: @karenmartinopex Monthly newsletter: www.ksmartin.com/subscribe 38