This document summarizes a presentation on lean leadership and management. It discusses: 1) The challenges organizations face in clearly defining their purpose, specifying value-creating processes, and engaging people to improve processes. 2) How lean thinking addresses these challenges by specifying value through end-to-end value streams, analyzing processes to remove waste, placing activities in continuous flow, and engaging people in continuous improvement. 3) The differences between the "Sloan school of management" focused on vertical organization and planning from the top-down, and the "Toyoda school of management" focused on horizontal processes, problem-solving by line managers, and steady continuous improvement.

1. Global Lean Healthcare Summit
Kenilworth, Warwickshire, UK
June 25, 2007
Lean Leadership & Management
James P. Womack, Chairman, Lean Enterprise Institute

2. 2
Every Organization Needs to Address:
• Purpose – Providing the value the customer wants so
the organization can prosper.
Without clarity of purpose, everything else is difficult or
impossible.

3. 3
Every Organization Need to Address
• Process – The series of actions/steps that must be
performed properly in the proper sequence at the proper
time to create the value the customer seeks.
All value is the result of some process:
Primary: Product and process development, fulfillment
from order through transformation to delivery, and
support through the product’s life cycle
Support: Hiring, training, accounting, etc.
Ideal process: Every step is valuable, capable, available,
adequate & flexible. (Capable + available = stable.)
Ideal process: Steps are flowing (or pulled) and leveled.

4. 4
Every Organization Needs to Address:
• People – To engage everyone touching the value
creating processes (value streams) in seeing,
sustaining, and improving them.

5. 5
The Management Challenge
• Define the purpose &
• Specify the processes for achieving the purpose
• While aligning & engaging the people touching the
processes.
Note: Most organizations – including Toyota -- are
functional & vertical; horizontal management of end-to-
end processes is usually subordinate and weak.

6. 6
The Contribution of Lean Thinking
Observation that organizations perform better when they:
• Specify value (customer purpose) by end-to-end value
streams flowing horizontally across the organization.
• Analyze each value stream to remove the wasted
activities and the instabilities (muda, mura & muri.)
• Place the remaining activities in continuous flow.
• Pull materials (needed goods, services, information,
and the product itself) from previous steps when flow is
not possible. (Never push!)
• Engage everyone touching the value stream in
continually seeking perfection.

7. 7
In Healthcare
• Value/purpose = Prevention, diagnosis, treatment &
maintenance of medical conditions, with best outcomes
at lowest costs?
• Value stream = Patient pathways through cycles of
intervention for given conditions (plus secondary,
support pathways for materials and information)?
• Flow = Moving the patient as quickly as possible from
the start to finish of each cycle/pathway?
• Pull = Sending clear signals about availability to the
previous step, when patients, materials, and information
cannot flow continuously?
• Perfection = Continually analyzing the value of every
pathway and steadily improving every step?

8. 8
Most Organizations Struggle
• Purpose – solving the customer’s problems while
addressing the organization’s needs -- is not clearly
defined.
• Processes (value streams) are not clearly specified
and visible to everyone.
• People are not engaged in optimizing the whole value
stream rather than their point in a vertical organization.
In particular: No one is responsible for each value
stream, to clarify its purpose, evaluate its process, and
engage the people touching the stream to improve it.

9. 9
Most Organizations Struggle
• The problem is typically not the lack of tools – 5S,
visual control boards, poka-yoke, quick changeovers of
equipment, andon, kanban, concurrent design, target
costing…even value stream maps!
• Instead, it’s a lack of:
Lean leadership
&
Lean management.

10. 10
Leadership Versus Management
• Lean leadership is about:
Transforming organizations and value streams from
“mass” to “lean” (through kaikaku.)
• Lean management is about:
Sustaining value streams (with standard management) &
Improving/perfecting organizations and value streams
once transformed (through kaizen.)
• The same person can be a leader or a manager in
different circumstances; at the highest level in changing
the management system and at lower levels in taking
responsibility for individual value streams.

11. 11
Why Are Lean Leadership &
Lean Management So Hard?
• We have a long (100 year) history of mass
production leadership and management.
• It fits comfortably with our “principles first” way of
thinking and teaching.
• Its architect was Alfred Sloan at General Motors,
with subsequent elaborations by other firms,
notably General Electric.
• Its logic contrasts with lean leadership and lean
management on every dimension.

12. 12
The Sloan School of Management
• Clear grants of authority, for organizational units and
activities within units (verticals.)
• Planning and direction from the top down.
• Bosses provide answers; to be implemented by
subordinates.
• Line managers judged on results -- often financial -- at
the end of reporting periods.

13. 13
The Sloan School of Management
• Generalist managers, rotated frequently.
• Decisions made far from the point of value creation, by
analyzing data.
• Problem solving and improvement conducted by staffs
and through programs.
• Dramatic change achieved in a crisis through heroic,
“do what I say” leaders.

14. 14
The Lean Alternative
• In the 1940s, 1950s, and 1960s Toyota pioneered a
series of management innovations.
• Based on an “experience first” (genchi genbutsu)
way of thinking.
• Organized into a system by Eiji Toyoda.
• To create Lean Management.

15. 15
The Toyoda School of Management
• Planning and macro direction start at the top, but with
multiple feedback loops down the organization.
• Bosses ask questions; subordinates discover answers
after careful investigation through intense dialogue.
• Line managers focus on operating and improving
clearly specified processes.
• Managers try to make abnormalities instantly visible;
implement countermeasures while seeking root causes.
• Good results emerge from a focus on the details of the
process every day (and even every minute!) rather than
a focus on results at the end of the reporting period.

16. 16
The Toyoda School of Management
• Responsibility for horizontal processes supersedes
authority for vertical organizational units. (E.g., Toyota
Chief Engineer.)
• Decisions made as close to the point of value creation
as possible using direct observation; turning “data”
into “facts”.
• Problem solving and improvement conducted mostly
by highly knowledgeable line managers, in problem
solving loops with superiors and subordinates.
• Steady improvement, through lean management,
reduces need for heroic leadership to address crises.
(“Fewer hunters; more farmers.”)

17. 17
The Key Tools of Lean Management
• Strategy deployment/policy management/hoshin
kanri (pick your term) at the top of the organization – to
set direction (and metrics), prioritize actions, and de-
select actions that are currently beyond resources.
• A3 analysis for line managers in the middle of the
organization to justify actions, solve problems, and
transform value streams.
• Standard management (combined with standard work)
for managers along each value stream to sustain and
improve each process.

18. 18
Strategy Deployment
• You can see more from the bridge of the ship about the
external world.
• Senior management really can create value from the
bridge!
• What’s hardest to see from the bridge is the engine
room, where the value is created that powers the ship!
• Strategy deployment tries to link the bridge with the
engine room through a series to dialogue loops in which
managers at a higher level with greater external
visibility ask managers at a lower level with more
detailed knowledge of value creating processes to solve
problems.

19. 19
A3 Analysis
• A simple tool for solving problems, justifying proposed
actions, and making plans.
• Describes the problem.
• Characterizes the current condition causing the
problem.
• Proposes a future condition solving the problem.
• Describes who must do what when to create and
sustain the future condition.
• Determines what evidence will show the problem has
been permanently solved.

20. 20
Standard Management
• Natural tendency of any process is to regress.
• Every process needs some responsible person to
continually monitor its status.
• Standard management includes a set of tools for making
sure that each process is sustained and improved.
Visual controls to show at a glance whether a process is
operating normally or abnormally.
Standard work for every action affecting the process.
Periodic audits to check the visual controls and standard
work.
Periodic kaizen to improve the process in light of new
external conditions or internal problems.

21. 21
The Risk in Using Lean Tools
• If these are merely tools -- used without a lean
thought process -- they are unlikely to have much
effect.
• Those trained in the “do what I say” school of
management are particularly susceptible.
• Improvement “programs” depend heavily on lean
tools but can’t be sustained without lean
management using a lean thought process.

22. 22
Current-State Value Stream as a Tool
22

23. 23
Future-State Value Stream as a Tool
23

24. 24
A3 As a Tool Versus a Thought Process
• The latest “lean” management technique.
• Wonderful way to operationalize Dr. Deming’s Plan-
Do-Check-Act cycle.
• Produces little or no result without the thought
process behind it.
• Must be a means of dialogue and joint problem
solving involving the more experienced manager
asking questions and the less experienced
manager or team reporting to the manager, who try
to verify the questions and find the answers.

25. 25
Sample A3

26. 26
Transition: Sloan to Toyoda; Mass to Lean
• Ideally starts with the senior management.
Strategy deployment as a way to see the big picture,
decide on a path of march, and change the way senior
managers think and manage!
• Often more practical to start with specific value streams
(e.g., “model lines”, “model wards”, “breakthrough
exercises”, “demonstration projects”, etc.)
Someone needs to take responsibility for identifying the
problem, tracing it to the current condition, envisioning
a better future state, and organizing the transformation.
This is lean leadership in action!
• Toyota seems to have started at the bottom by teaching
all managers problem solving and creating stability!

27. 27
Predictable Consequence
• As value streams are analyzed and “leaned”,
contradictions will emerge in the organization
between horizontal and vertical.
Vertical managers of functions/departments will
have different metrics and objectives from
overseers of horizontal processes!
Surfacing of contradictions is good! A key principle
of lean thinking is to make problems visible. “No
problem is problem.”

28. 28
First Moment of Truth
• When top managers need to reconcile horizontal and
vertical.
Example: Is asset utilization more important than
patient velocity in healthcare?
Example: Are departmental metrics more important
than end-to-end metrics for patient pathways?
The consequence of failing to reconcile contradictions
will be regression of horizontal processes to their
previous level of performance.
No amount of heroic leadership at the top of the value
stream level will make a long-term difference.

29. 29
Second Moment of Truth
• When top managers decide whether lean is a
program or a new way of leading and managing.
Will every process have a permanent “owner” who
continually asks about its value, assesses the
current condition, envisions a better condition,
determines who must do what when to achieve that
better condition, and collects the evidence that it
has been achieved?
Will every manager be taught and held to standard
management in which abnormalities in processes
are instantly visible and standard work is always
adhered to by means of frequent audits asking
probing questions?

30. 30
The Prize from the Transition
• Fewer heroic leaders (firefighters).
• More steady state (lean) managers.
• More smoothly flowing value streams at lower cost with
higher quality with higher responsiveness with less
hassle and anxiety for customers.
• More-engaged, less-stressed employees at every level
who learn to answer questions -- through management
by science -- rather just following orders.

31. 31
The Challenge in Healthcare
• There is no “Toyota” to copy in healthcare management.
• Healthcare organizations are amongst the world’s most
complex, even though patient pathways are often simple.
• Healthcare management is divided, and often contested,
among doctors, nurses, and administrators.
Healthcare managers are usually asset optimizers.
Doctors are usually point optimizers.
Nurses grasp the need for process management but have
not, to date, had acknowledgement of the importance of
this mission or a rigorous management method.

32. 32
The Opportunity of This Moment
• There is widespread agreement that healthcare faces
large problems.
• There is widespread agreement that healthcare
organizations must change.
• If no one knows the answers – and no one does --
what’s needed now is a lot of experiments!
• But mainly at the management & system level, not at the
point intervention level of most “lean” initiatives to date.
• The more that members of the healthcare community
document and share their experiments with lean
leadership and lean management, the greater the
opportunity for rapid, dramatic improvement!