Developing A Lean Culture Ame Champ Mtg 8 6 09

SCORE Business Systems Sustained Performance Through Engagement and Metrics AME Champions Meeting Montreal, Canada August 5 – 7, 2009

SCORE Business Systems 98%+ lean failure rate (Clifford Ransom) A member claimed anecdotal estimates of a 75% failure rate (LEI forum) 10-20% of leaders in a typical organization are unable or unwilling to make the lean conversion (TBM) 75% reported that they had made no or just some progress toward their World Class manufacturing goals . (How to Prevent Lean Implementation Failures: 10 Reasons Why Failures Occur By: Larry Rubrich) It is estimated that 70% or more of companies that attempt to implement lean fail when using mainstream practices. (Univ of Kentucky) Some Terrible Statistics!!! SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Lean experts say: “ Applying lean management principles exposes problems in traditional business systems, which often is threatening to middle managers in the problem areas,” said Chet Marchwinski, LEI communication director . “To get middle managers on board with the lean transformation, organizations must transform the metrics and behaviors for judging their performances.” “ A true culture of continuous improvement” is what is required. Jeffery Liker has identified the primary problem most organizations face in implementing large scale change, weather it is Lean, Six Sigma or some other company wide initiative. What is called for is a new culture, a culture of continuous improvement, a culture that embraces change. The primary reason most companies fail in their Lean implementation is because they fail to successfully change the culture. Programs, by definition, end. Conversely, the ancient origin of the word philosophy (philosophía) means “love of knowledge” or “love of wisdom.” And true love, as the good book tells us, never ends . So, make sure your lean and/or six sigma activities are part of an overall business philosophy and not a flavor of the month program. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Culture : the set of shared attitudes, values, goals, and practices that characterizes an institution or organization <a corporate culture focused on the bottom line> Behavior : the response of an individual, group, or species to its environment, the way in which something functions or operates Philosophy : the most basic beliefs, concepts, and attitudes of an individual or group Webster’s Dictionary Definitions SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Definitions of Lean Toyota Production System, is about the systematic elimination of waste. An overall methodology that seeks to minimize the resources required for production by eliminating waste. Amalgamation of Just in Time, Kaizen, Kanban and Total Quality ideas leading towards zero paper, zero inventory, zero downtime, zero defects, and zero delays in design, manufacture and distribution. Lean manufacturing is a comprehensive term referring to manufacturing methodologies based on maximizing value and minimizing waste in the manufacturing process. Misc definitions from websites SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Some basic assumptions Lean tools work People will change when there is need to change Greater than 50% of change efforts fail to meet expectations SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Some basic conclusions The tools don’t cause the failures Willingness to change does not cause failures So what causes the failures??? SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems So where does culture come from? Remember the definition (Culture : the set of shared attitudes, values, goals, and practices that characterizes an institution or organization <a corporate culture focused on the bottom line> ) Leaders SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Another Definition Leadership - a : the office or position of a leader b : capacity to lead c : the act or an instance of leading NOT very helpful! Webster’s SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Leaders……………………. Are Passionate about their job, company , community and their boss Treat others honorably and respectfully Show enthusiasm and energy and energize others Develop a strategy for their business and keep refining it Communicate the strategy Keep learning – are teachable, non-defensive Teach others Motivate others Encourage feedback SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Leaders……………………… Help others “invent” the right answer Are accountable – hold others accountable Praise when appropriate, coach as necessary Take corrective action when appropriate Are fair but tough Do what they say they are going to do Are consistent Maintain disciplined financial structure Manage by fact Are entrepreneurial SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Lee Cockrell, Executive Vice President Walt Disney World Resorts Great Leader Strategies Foster an inclusive environment Design your organization structure for success, “Break the Mold” Make sure you have the right people in the right roles Ensure that cast members are knowledgeable about their roles SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Great Leader Strategies (con’t) Make dramatic leaps in guest service Implement effect, structured processes for getting work done Explore, probe and know what is going on in your organization and act upon the information Actively observe and react to the performance of your direct reports. Take time for recognition, coaching and counseling Expand and Act Upon Knowledge and Experience of the Best Service Available Anywhere! SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Great Leader Strategies (con’t) Partner Effectively and Successfully With Staff and Other Cross-Functional Partners! Demonstrate a Passionate, Professional Commitment to Your Role!!!!!!! Understand and Demonstrate Mastery of Business Fundamentals! SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Culture Statement We will respect each other and treat each other with dignity regardless of position within the company. The Golden Rule will extend to our customers, suppliers and our communities. Diversity will be embraced. We will make and keep commitments. We will maintain the highest levels of integrity. We will not lie or bend the truth. We will not allow non-compliance to any of the various regulations to which we must adhere. We will place the needs of the team above our own. We will do what is right regardless of our personal desires. We will do this while maintaining a balance in our lives. We will strive for excellence in everything we do. There are times we will fail but not because we didn’t give our best efforts. An Example SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Culture Statement (con’t) We will be customer focused and will deliver superior value to those we serve. We will be entrepreneurial, pursuing opportunities to expand our market presence, industrial relationships, products and services. We will continuously learn and grow as a team and as individuals. We will improve ourselves, our processes and our business. We will be good stewards. We will protect our assets, including our employees, our relationships and our reputation. We will come to work with hearts, minds and spirits engaged. We will have fun winning. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Changing your organizational culture is the toughest task you will ever take on. Your organizational culture was formed over years of interaction between the participants in the organization. It can feel like pushing a rock uphill. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Organizational cultures form for a reason. Perhaps the current organizational culture matches the style and comfort zone of the company founder. Culture frequently echoes the prevailing management style. Since managers tend to hire people just like themselves, the established organizational culture is reinforced by new hires. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Organizational culture grows over time. People are comfortable with the current organizational culture. For people to consider culture change, usually a significant event must occur. An event that rocks their world such as flirting with bankruptcy, a significant loss of sales and customers, or losing a million dollars, might get people's attention. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Culture Change Facts It WILL take time (years) There will be bumps in the road Must be driven from the top Is communication driven Requires training Is a process! Must be organization wide SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems The other work systems that must be changed include: Employee Promotions Pay Practices Performance Management Employee Selection Leadership Style Communication (Yes it is a work system!) SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems “ Our research continues to show a well-substantiated relationship exists between employee engagement – the extent to which employees are committed, believe in the values of the company, feel pride in working for their employer, and are motivated to go the extra mile – and business results.” – ISR Global Research Director Patrick Kulesa SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Employers typically do just enough to ensure the majority of employees don’t leave; they train just enough, they offer just enough benefits, and they give just enough positive reinforcement. Is this the right way to approach employee loyalty? Consider these two startling facts: • Each year the average company loses 20-50% of its employee base – Bain & Company • Replacing a lost employee costs 150% of that person’s annual salary – Columbia University SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems In a Gallup Study 19% are actively disengaged (unhappy and spreading their discontent) 55% are not engaged (just putting in time) Only 26% of the US working population is engaged (loyal and productive) $350 billion per year in lost productivity Every employer is wasting approximately 10% of their payroll dollars on lost productivity due to disengagement SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Engaged employees are more than satisfied and more than loyal; they are emotionally connected to you. They go out of their way to show their association with your company, they become an active promoter of your business, and support you during good and bad times. In the end, they make you more money. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems To Increase Engagement Jobs must have: Meaningfulness Variety Autonomy Co-worker support With job enrichment, employee performance on prescribed tasks improves. Workers define their role more broadly— and willingly take on tasks outside their formal job description. To Enhance Commitment Companies must provide employees with opportunities for personal development. Increasing: Knowledge Skills Experience Expertise Builds Increasing: Self esteem Engagement Productivity Commitment SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems SCORE Business Systems, LLC All Rights Reserved August 6, 2009 So the next question is how do you achieve the level of engagement where your employees are truly influencing your financial performance and customer satisfaction?

SCORE Business Systems Alignment Current State Future State Ideal State Low Organizational Alignment High Unaligned projects or program approach Plan without communication and employee engagement Sustained journey with engaged and empowered employees Team Individual Company SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Organizational Alignment Basics Starts with Vision, Mission, Values, Culture Follow up with Strategic Plan Flowed down with Policy Deployment Executed with Lean tools Communicated with a Balanced SCOREcard. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Leadership Mission/Vision Financial Values Social/Evn. Values Management Culture Partnership Culture Win-Win Shared Rewards Basic Trust Recognition Excellence Listening Competence Respect Mutual Influence Mutual Assistance Joint Decisions Long-term view Aligned Engagement By meeting mutual needs Attitude Philosophy Behavior Sustained Success FOCUS HERE TO GET HERE SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems A balanced compensation plan, based upon valid measures of continuous improvement, true operational efficiency, teamwork and short-term results will promote the culture where lean initiatives can survive, thrive and produce tremendous results. (Gainsharing) The company vision must also serve as the roadmap to success through a business plan. The business plan must cascade the top-level strategies into division, department, and finally to individual responsibilities, action plans, measurable goals and timelines. (Strategic Planning) Another key element for success at lean methods is a company culture where the leadership and the management are participating members of the total team and where there is open and honest communication. (Communication Plan) Are these in your Lean transition Plan?????? SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems What About? Creativity training Leadership training Performance reviews Win-Win negotiating Active Listening Empowerment Problem Solving SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems What is the Alternative to Employee Engagement? Higher employee turnover - Employees leave, taking their reservoir of knowledge and experience to another workplace Diminished performance - Competency of the workforce is reduced, at least short term, until new employees are trained Lost training dollars - Time and money invested in training and development programs for departing workers is wasted Lower morale - Remaining employees can be overburdened with new duties, in addition the unresolved issues that already prevent their full engagement Defining Employee Engagement What is employee engagement exactly? AlphaMeasure defines employee engagement as the level of commitment and involvement an employee has towards their organization and its values. How Can You Attain Employee Engagement? Listen to your employees and remember that this is a continuous process. SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems We MUST remember these are the tools of execution, the enablers. It’s easy to have the hammer strike the nail, wrench turn the nut, screw driver turn the screw, but it takes time, planning, communication, and leadership to build a house! SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Wrapping it all together, what do you get ……..…… Improved Morale Employee Engagement and Empowerment Reduced Cost Flexible Workforce Improved Problem Solving Capability Increased Velocity Increased Production Capacity Increased Retention Increased Revenue Increased Customer Satisfaction and Retention Increased Profit, Cash Flow and Earnings SCORE Business Systems, LLC All Rights Reserved August 6, 2009

SCORE Business Systems Let us start a cultural revolution for you! SCORE Business Systems 4113 Summer Brook Drive Apex, NC 27539 919-491-9157 www.scorebusinesssystems.com SCORE Business Systems, LLC All Rights Reserved August 6, 2009

Developing A Lean Culture Ame Champ Mtg 8 6 09

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