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Journey to a Lean Enterprise:
New Frontiers
Lean Webinar Series
May 5, 2011

Company

LOGO
Welcome!
To new friends and old across the U.S. (28
states)


Special welcome to our friends at the Veterans
Health Administration.

To our global friends in:






Australia
Canada
Romania
Switzerland
Uruguay

© 2011 Karen Martin & Associates

2
Consider this…
Success with Improvement Efforts
None
17%

Lasting
20%

Temporary
63%

The Economist, 2000
© 2011 Karen Martin & Associates

3
A decade later…
Financial Impact of
Improvement Efforts

Minimal
to None
55%

Some
45%

View of Existing
Improvement Efforts

Re-eval
needed
67%

OK as is
33%

Accenture, January 2010

© 2011 Karen Martin & Associates

4
Industry Week’s
2007 Census of Manufacturing
433 Respondents
80%
70%
60%
50%
40%

30%
20%
10%

0%
Adopted Lean

© 2011 Karen Martin & Associates

Seeing Anticipated Results

5
6
Our initial understanding was
tools-based

The words “leadership”
and “culture” aren’t
listed the book’s index.

© 2011 Karen Martin & Associates

7
Toyota’s 4P Business Model
Where most
“Lean”
organizations
are

Problem-Solving
(Continuous Improvement &
Learning)

People & Partners
(Respect, Challenge, & Grow
Them)

Jeff Liker
The Toyota Way,
2004

Process
(Eliminate Waste)

Philosophy
(Long-Term Thinking)
8
What is Lean?
“The pursuit of perfection by constantly
eliminating waste through problem-solving.”
— Jeff Liker, The Toyota Way to Continuous Improvement

“Lean isn’t about eliminating waste. It’s about
developing people and building organizationwide problem-solving capabilities to enable us
to eliminate waste.”
— Mike Rother, Toyota Kata workshop

© 2011 Karen Martin & Associates

9
Toyota’s 4P Business Model

The New
Frontier

Problem-Solving
(Continuous Improvement &
Learning)

People & Partners
(Respect, Challenge, & Grow
Them)

Jeff Liker
The Toyota Way,
2004

Process
(Eliminate Waste)

Philosophy
(Long-Term Thinking)
10
“We build people before automobiles.”
– Toyota Motor Corporation

May 2004
11
Effort Expended on Successful
Lean Transformations

Changing
leadership
practices,
behaviors,
& mindset
80%

Tools
20%

Creating a Lean Culture, David Mann, 2010
© 2011 Karen Martin & Associates

12
The Role of the Sensei
“The relationship between the sensei
and the student (deshi) in Toyota is a
key success factor, and one that is
very much underappreciated in the
lean movement.”
“We see process improvement and
people development as two sides of
the same coin in organizations.”
— Jeff Liker & James Franz, The Toyota Way to Continuous Improvement

© 2011 Karen Martin & Associates

13
If you want one year of prosperity,
grow seeds.
If you want ten years of prosperity,
grow trees.
If you want one hundred years of prosperity,
grow people.
— Chinese proverb
© 2011 Karen Martin & Associates

14
What is the Role of the Manager?

To develop his/her people into proficient problem-solvers.
Manager = Coach
© 2011 Karen Martin & Associates

15
New Understanding about how
Toyota Operates

Leaders coach
and mentor.
The workers
identify and solve
problems daily.
Management’s job is to develop the workforce
(and help remove roadblocks to their success).
© 2011 Karen Martin & Associates

16
Coaching Relationship

Mentoring Relationship

Wisdom

Wisdom

? ? ?
?
?
?
Coach

Coachee

Focus: Asking questions

Mentor

Mentee

Focus: Providing information
Everyone in the organization must practice PDCA
• Grasp a deep
understanding of the
current state.
• Set a target condition.
• Identify obstacles to
achieving target
condition.

• Select
countermeasures.
• Conduct miniexperiments.
• Implement the best
countermeasures.

Plan

Act

Check

(Adjust)
• Adjust process as
needed.
• Set new target condition.
• Continuously improve.

Do

(Study)
• Measure process
performance.

18
Managing the Business =
Problem-Solving

© 2011 Karen Martin & Associates

19
A New Definition of Lean?

Engagement [en-geyj-muhnt]]
– noun
1. Enthusiastically providing value to
customers.
2. Enthusiastically solving problems.

© 2011 Karen Martin & Associates

20
Strategic

Improvement Roles
for Full Engagement
Who?

Level of Authority

Senior Leadership

What has to happen;
policies

Tactical

Middle
Management

Frontline Workers

© 2011 Karen Martin & Associates

How it will happen;
procedures

21
What Should We Focus On?

22
TRUE
NORTH

You need an
improvement
strategy that’s
aligned with
overarching
business goals

23
Tying Improvement to
Overarching Business Goals

24
One Option:
Hoshin Kanri (aka Strategy Deployment)

25
What are the root causes for
resistance to change?
No clear vision re: what or why.
Employees have limited control
over their work and limited input
regarding improvements.
Leadership is stuck in old school
western management; directive;
low respect for workers.
Both leadership and the
frontlines lack problem-solving
skills.
© 2011 Karen Martin & Associates
Building a Lean Culture
Strategy


Define and communicate clear annual business goals.

People Development


Build problem-solving capabilities across the entire
organization.
 Value stream management, A3 Management, Toyota Kata



Leaders and managers are coaches.

Process Design & Management





Make problems visible.
Stop work when problems are discovered.
Continuously set new target condition & engage in PDCA.
Manage processes vs. people.

© 2011 Karen Martin & Associates

27
Cultural Transformation

Results
Actions

The Results Pyramid
Partners in Leadership

Beliefs
© 2011 Karen Martin & Associates

Experiences
We’ve Reached a Fork in the Problem-Solving Road:
The Choice is Ours

People-based Lean
Tools-based Lean

29
It’s time to pass the improvement
baton from the elite few to the
common many

30
Vision for the Future
Achieving significant results from
continuous improvement efforts?

Yes
100%

© 2011 Karen Martin & Associates

31
For Further Idea Exchange

7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
Connect & learn
Free monthly newsletter:
www.ksmartin.com/subscribe

© 2011 Karen Martin & Associates

32
Your Questions
Are there criteria to determine organizational
readiness to adopt a Lean transformation?
What staff & financial resources does an
organization typically need to support a Lean
enterprise (e.g. rule of thumb for FTEs to devote to
continuous improvement)?
What is your take on the psychology of
improvement and what are your sources for that,
including experience?
NEXT WEBINAR – The Coach Is In – Tues May 24 11:00-12:00 PDT
© 2011 Karen Martin & Associates

33

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Journey to a Lean Enterprise: New Frontiers

  • 1. Journey to a Lean Enterprise: New Frontiers Lean Webinar Series May 5, 2011 Company LOGO
  • 2. Welcome! To new friends and old across the U.S. (28 states)  Special welcome to our friends at the Veterans Health Administration. To our global friends in:      Australia Canada Romania Switzerland Uruguay © 2011 Karen Martin & Associates 2
  • 3. Consider this… Success with Improvement Efforts None 17% Lasting 20% Temporary 63% The Economist, 2000 © 2011 Karen Martin & Associates 3
  • 4. A decade later… Financial Impact of Improvement Efforts Minimal to None 55% Some 45% View of Existing Improvement Efforts Re-eval needed 67% OK as is 33% Accenture, January 2010 © 2011 Karen Martin & Associates 4
  • 5. Industry Week’s 2007 Census of Manufacturing 433 Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% Adopted Lean © 2011 Karen Martin & Associates Seeing Anticipated Results 5
  • 6. 6
  • 7. Our initial understanding was tools-based The words “leadership” and “culture” aren’t listed the book’s index. © 2011 Karen Martin & Associates 7
  • 8. Toyota’s 4P Business Model Where most “Lean” organizations are Problem-Solving (Continuous Improvement & Learning) People & Partners (Respect, Challenge, & Grow Them) Jeff Liker The Toyota Way, 2004 Process (Eliminate Waste) Philosophy (Long-Term Thinking) 8
  • 9. What is Lean? “The pursuit of perfection by constantly eliminating waste through problem-solving.” — Jeff Liker, The Toyota Way to Continuous Improvement “Lean isn’t about eliminating waste. It’s about developing people and building organizationwide problem-solving capabilities to enable us to eliminate waste.” — Mike Rother, Toyota Kata workshop © 2011 Karen Martin & Associates 9
  • 10. Toyota’s 4P Business Model The New Frontier Problem-Solving (Continuous Improvement & Learning) People & Partners (Respect, Challenge, & Grow Them) Jeff Liker The Toyota Way, 2004 Process (Eliminate Waste) Philosophy (Long-Term Thinking) 10
  • 11. “We build people before automobiles.” – Toyota Motor Corporation May 2004 11
  • 12. Effort Expended on Successful Lean Transformations Changing leadership practices, behaviors, & mindset 80% Tools 20% Creating a Lean Culture, David Mann, 2010 © 2011 Karen Martin & Associates 12
  • 13. The Role of the Sensei “The relationship between the sensei and the student (deshi) in Toyota is a key success factor, and one that is very much underappreciated in the lean movement.” “We see process improvement and people development as two sides of the same coin in organizations.” — Jeff Liker & James Franz, The Toyota Way to Continuous Improvement © 2011 Karen Martin & Associates 13
  • 14. If you want one year of prosperity, grow seeds. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people. — Chinese proverb © 2011 Karen Martin & Associates 14
  • 15. What is the Role of the Manager? To develop his/her people into proficient problem-solvers. Manager = Coach © 2011 Karen Martin & Associates 15
  • 16. New Understanding about how Toyota Operates Leaders coach and mentor. The workers identify and solve problems daily. Management’s job is to develop the workforce (and help remove roadblocks to their success). © 2011 Karen Martin & Associates 16
  • 17. Coaching Relationship Mentoring Relationship Wisdom Wisdom ? ? ? ? ? ? Coach Coachee Focus: Asking questions Mentor Mentee Focus: Providing information
  • 18. Everyone in the organization must practice PDCA • Grasp a deep understanding of the current state. • Set a target condition. • Identify obstacles to achieving target condition. • Select countermeasures. • Conduct miniexperiments. • Implement the best countermeasures. Plan Act Check (Adjust) • Adjust process as needed. • Set new target condition. • Continuously improve. Do (Study) • Measure process performance. 18
  • 19. Managing the Business = Problem-Solving © 2011 Karen Martin & Associates 19
  • 20. A New Definition of Lean? Engagement [en-geyj-muhnt]] – noun 1. Enthusiastically providing value to customers. 2. Enthusiastically solving problems. © 2011 Karen Martin & Associates 20
  • 21. Strategic Improvement Roles for Full Engagement Who? Level of Authority Senior Leadership What has to happen; policies Tactical Middle Management Frontline Workers © 2011 Karen Martin & Associates How it will happen; procedures 21
  • 22. What Should We Focus On? 22
  • 23. TRUE NORTH You need an improvement strategy that’s aligned with overarching business goals 23
  • 24. Tying Improvement to Overarching Business Goals 24
  • 25. One Option: Hoshin Kanri (aka Strategy Deployment) 25
  • 26. What are the root causes for resistance to change? No clear vision re: what or why. Employees have limited control over their work and limited input regarding improvements. Leadership is stuck in old school western management; directive; low respect for workers. Both leadership and the frontlines lack problem-solving skills. © 2011 Karen Martin & Associates
  • 27. Building a Lean Culture Strategy  Define and communicate clear annual business goals. People Development  Build problem-solving capabilities across the entire organization.  Value stream management, A3 Management, Toyota Kata  Leaders and managers are coaches. Process Design & Management     Make problems visible. Stop work when problems are discovered. Continuously set new target condition & engage in PDCA. Manage processes vs. people. © 2011 Karen Martin & Associates 27
  • 28. Cultural Transformation Results Actions The Results Pyramid Partners in Leadership Beliefs © 2011 Karen Martin & Associates Experiences
  • 29. We’ve Reached a Fork in the Problem-Solving Road: The Choice is Ours People-based Lean Tools-based Lean 29
  • 30. It’s time to pass the improvement baton from the elite few to the common many 30
  • 31. Vision for the Future Achieving significant results from continuous improvement efforts? Yes 100% © 2011 Karen Martin & Associates 31
  • 32. For Further Idea Exchange 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Connect & learn Free monthly newsletter: www.ksmartin.com/subscribe © 2011 Karen Martin & Associates 32
  • 33. Your Questions Are there criteria to determine organizational readiness to adopt a Lean transformation? What staff & financial resources does an organization typically need to support a Lean enterprise (e.g. rule of thumb for FTEs to devote to continuous improvement)? What is your take on the psychology of improvement and what are your sources for that, including experience? NEXT WEBINAR – The Coach Is In – Tues May 24 11:00-12:00 PDT © 2011 Karen Martin & Associates 33