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

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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?
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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