Our most valuable resource. Honest.

When planning to improve by implementing Lean, management need to be very wary about what they are going to do with the people that are freed up by the effort. It is inevitable that in some parts of the process, fewer staff will be needed to complete the tasks. It is true that in some situations, letting staff go is necessary to get down to the correct staffing levels to complete the work. However, even in these rare situations, it should only be done once, it should be done in a short time frame and not drag out over weeks and months and it should be made clear to staff that it is a one time hit.

In truth, the situation where companies need to loose staff are few and far between. Lean improvement should be seen as an opportunity to increase capacity. If you provide a better service to your customers by reducing lead times, increasing quality and reliability and cutting cost, you should see demand for your product or service go up. When demand rises you will need all the increased capacity you can get. You should not be tempted to make a group of staff redundant, only to go and rehire staff a few months down the line.

The main reason for not firing staff, is not the capacity argument, but that the staff who are left will not want to continue to improve if they saw their colleagues and friends made redundant as a result of improvement activities. Why would they? Plus who would you rather made suggestions for improvement, staff who have been in the work for a while, or a bunch of newbies, still green to all the idiosyncrasies of your business and sector?

Don't sack 'em, use 'em.

How to pull in the office

A push system is where each step or in a process works as hard as possible and pushes all the work it completes to the next step. This means that work-in-progress will sit between steps gathering dust and lengthening end-to-end time. It also means that any improvement feedback loops will be ineffective. If work is flowing quickly through a system, any errors that creep in can be quickly spotted by the downstream processes and the source of the error fixed before they produce too much more. If work is sitting between stations for hours or days, it might be days or weeks before errors are spotted and in the meantime that same error might have been repeated many times in the work that is sat around.

So we want to aim for flow and pull. Flow means that the work does not stop anywhere but keeps moving along. Pull is the compromise where flow is not possible. It is when the upstream step does not do anything until the next step is free to work on it. This is sometimes done with kanban, but can equally be achieved with a space on a desk that may only contain one piece of work.

In an office you have to be pretty innovative about pull signals. There is no one technique that will work everywhere. But always try to make whatever you do visual, physical or both. Don't hide flow or pull signals away in computers if at all possible. The above example of the space on the desk is both physical (if a piece of work occupies the space, then the upstream process does nothing), and visual (the upstream worker only need to glance over at the desk to see what the status is). Keeping it simple and not jumping to the conclusion that technology is the way to improve everything is a very powerful lesson to promote pull.

Getting lost before you leave

A man gets off a train in a small village. As he steps onto the platform he looks around, lost. The new arrival spots an ancient old man dressed as a porter and asks, "Old man, can you tell me the way to Harthpenny House?" The old man looks at him and replies, "Well sir, if I were you, I wouldn't start from here."

It has been suggested to me a few times that we can dispense with the current state map. That we could go much faster if we just did a future state map and implemented the plan to get there. So I always tell that old joke. If you want to go anywhere you always have to start from "here". You have no option. But in many organisations they don't know where "here" is. So you have to find out. Otherwise you will take with you all the sources of variation and error on your travels.

Ups and downs

"Life is full of ups and downs."

We understand it in a non-business setting. So why is an appreciation for variation so lacking in a business setting? Dunno. But let me give you a (fictional) example.

Rob works in an insurance company, processing claim forms. Rob is measured on how many forms he processes in a day. The more forms, the happier Rob's boss is. Fine.

So on Monday, Rob handles 20 forms. Tuesday he completes 24. Brilliant. Tick and a star. Wednesday we see Rob completing 16 forms. Booo, hisssss. Thursday 21 and Friday 18. Hmmmm...

What is happening here? Is Rob working harder on Monday and especially on Tuesday? Has he suddenly gone thick on Wednesday? Or is there something else happening here? What is happening is that there is variation due to the system. (The system of work, not the IT system, by the way.)

Some insurance claims are longer than others, some more tricky, some are less easy to read and some contain more errors or omissions than others. Some days the computer network responds faster than other days and some days Rob gets more interruptions from his boss (probably more on Thursday morning after Rob's performance on Wednesday!!).

If he was clued up like the reader, Rob's boss would have Rob plot his own forms per day on a control chart. Boss would see that the average is 19.8 and that it would be quite normal for Rob to do as many as 33 forms or as few as 7 forms on any given day. That is the variation that this system could exhibit. If however, Rob did 38 or 2 in a day, Rob's boss would know that something special had happened and that would need to be investigated. But between 7 and 33 nothing need to be done. No employee of the month awards and no "motivational" sessions when the figures get lower.

(Actually, if the boss was really as clued up as the reader, he would know that the number of forms per day is a terrible measure since it can't possibly be aligned to customer purpose!! He would also know that 5 points is really too few to get a proper measure of the variation. But hey, this is fiction.)

So if we wanted to raise that average what do we do? We have to find the sources of variation in the system and remove them. Stop the errors getting onto the forms, ensure clean data from the start of the flow, ensure that the network is reliable etc. But our clued up boss would not work on Rob and his "energy" or "alignment to corporate values", the boss would understand that it was his own responsibility to change the system in which Rob works.

And that understanding, which comes from an appreciation of a fairly simple statistical technique, can be quite profound, since it changes how management see themselves, their staff and their respective responsibilities and tasks.

My eyes!! I can't see.

What is the difference between manufacturing and service? No, it is not a joke and no I am not talking about those "in service, value is made at the point of transaction" or "in service, the customer is part of the process" statements. All valid points, but get business people of whatever stripe in the same room and ask them that question and you will never get them to agree.

Let's re-ask the question from the point of view of applying Lean Thinking to each. The difference between the two is that waste is much harder to see in service organisations. That is not to say that waste is always easy to see in manufacturing. But in a factory you can walk along a production line and see inventory sitting around, you can watch staff walking to and fro to get tools and parts and you can see the rework bins full of bad parts waiting to be fixed.

In the office people often sit quietly and the work in progress is in email in boxes, paper in-trays, computer systems and postal systems. How do you see the waste? With difficulty, is the answer. The only way to really see is to map the process with the people who do the work. And the trick in doing that is to get them to tell you the secret stuff they do to get the job done. The personal spreadsheet of the people to call in certain situations, the bits of paper that show the product codes that they have collected over the years to help them do their jobs. Some of these things need canning and some need bringing out to become part of the official process to assist all who do that work.

Bringing out these things is not easy in itself. You need to persuade staff that you are not out to expose their tricks to punish them for working around the system, but that you need an accurate picture of the current reality so we can all move to something better.

Involving the staff in the mapping process is essential, since if you don't you will never expose all the waste in an office setting were it is very difficult to see waste just by walking around.

What's my motivation?

Motivation. Where does it come from? Where does it go? Does it come from outside or from within? Is there an unlimited resource or do you have to pay for every ounce?

W. Edwards Deming said that all motivation was intrinsic, that it came from inside. He said that all management needed to do to motivate staff was to stop DEmotivating them. Deming said that we needed to provide "joy in work", that "pride in workmanship" was where real and lasting motivation came from.

In the news today was the story that the Department of Work and Pensions (DWP) was going to award holidays to those staff that had excellent attendance records. Apparently, the civil service has an average of 12.6 sick days per employee per year. That is twice the average in business.

I would bet my bottom dollar that instead of providing extrinsic motivation to turn up to work, that if the DWP management gave their staff non-DEmotivating work to do their absenteeism would fall dramatically. Get out of the way of staff doing a good job. Then they will want to come in of their own accord.

How do you get out of the way? Stop prescribing work, start listening to your staff, implement the improvements they suggest (or have a very good reason why you can't), help staff study the design of work as a system and involve staff in the changes that result.

People like to come to work tomorrow if they did a good job today.

And I believe that people love to come to work when they did a good job today and helped improve the work so that they know they will do a better job tomorrow.

Best,

Rob

Hands off those tools

If you choose to apply Lean thinking in your organisation you will need to apply some tools. Tools such as Statistical Process Control, Value Stream Mapping, Pareto charts etc. All useful, all to be handled with care.

Lean is not tools.

If you think you can learn some tools and some fancy words and "do" lean, you are in for a big shock. Again...

Lean is not tools.

It is not kanban. It is not heijunka. It is not Value Stream Mapping.

Lean is a way of thinking. Lean is a view of how work is done. Lean says, "How can we reduce the waste in this work and make the value steps flow?". Lean does not say, "Woo-hoo!! Loads of tools and techniques, lets splatter them across the organisation."

If anyone ever says to you, "In order to implement Lean here, we need to teach everyone, A, B, C..." Ditch them.

Also, training in Lean is not being Lean. Lean is something you are, something you do. You learn by doing, not by sitting in a training room. And, at the risk of losing both my readers, it is not something you learn off the internet, even in a brilliant blog like this one!!

You must understand when and why to apply a tool or technique. Ask yourself, "Will this let me see/remove/understand waste or flow?" If the answer is "no" or "not sure" then don't do it. And if you do do it, try it in a small way or for a short time to see if you get any benefit and if you don't get benefit or understanding, then stop.

Lean is about application of principles. All the tools grow out of the principles. But they should only be used when you understand the principle that they are assisting you with.

It is not easy. The tools are very seductive.

Best,

Rob

Targets in Business: Shoot To Kill

Targets are great. They give us something to aim at (duh!). Targets point us in the right direction. They give everyone a common goal. Targets are clear and unambiguous.

All correct. If that is, it is the target you want to hit. If you want to do something else then setting and even hitting targets won't help at all.

Turn off the Targets and go out and do something less damaging instead...

The "something instead" is to improve your business as your customer would like you to. Targets will take you in an entirely different direction. For example, many call centres have targets about how long it takes to pick up the phone. They express them in the form, "90% of calls must be answered in 30 seconds". Fine. Nice target. But what about what is important to the customer? Sure we want the phone to be picked up before our body breaks down and turns to dust. But actually this is the third time this week we have called about this problem and while they do pick up the phone very briskly, they aren't doing what I want.

Measurements of activity are bad enough, but slap a target on top and you are guiding staff and manager behaviour away from customer purpose and toward hitting that target instead.

Think of the stories about the NHS fiddling the figures about waiting lists. Some of them were changing behaviour like admitting patients to beds to meet the four hour targeted wait in A&E, others were pure diddling of the numbers by the staff making returns to central government in order to be seen to hit the targets. Which is worse? I couldn't possibly comment. Safe to say that both actions are caused by the target setters and those people should not turn round an berate the cheats. They need to look a little closer to home.

Instead, design against demand, design work to meet customer purpose and drop all those nasty targets. Euugghhhghg!!!

Demanding Customers

Customers. What do they know? Nothing. And everything.

If you wanted to find out what your customers thought you might do a customer survey right? You would think up a bunch of questions, send it out and analyse the results. If you were really serious you might employ a specialist company to assist you. But would you get what you want? Probably not, I would argue. At least you would not be getting information that would be better than that which is at your fingertips right now.

The data that can tell you exactly what the customer want is your demand data. Do you know how many times customers call, write, visit, email? Do you know what it is they want when they contact you? More importantly do you know how much is value demand and how much is failure demand? (I am indebted to John Seddon of Vanguard for this idea.)

Value demand is when a customer contacts you to get value. E.g. "I would like to buy..." or "Can you give me advice about...?" or "I would like more..."

Failure demand is contact that is caused by a failure or inaction on the part of your company. E.g. "You said someone would call. They never came." or "My widget arrived and it is not what I asked for." or "I haven't heard anything. What is going on?"

One of the biggest sources of improvement is the failure demand. Most companies never even realise that they have any. All calls are demand and have to be resourced. No matter that 60% of people are calling back to complain or to chase a previous contact.

If you can identify the causes of failure demand, improve so that those causes go away, you can switch off failure demand and make huge savings. Not only do you no longer have to resource the response to the failure demand, but you have more time for the value demand or time for more value demand.

So before you get into customer surveys, listen to your customer SHOUTING at you by the types of demand they bring to you.

Best,

Rob

Understand Variation

Last time I talked about the mistake of attributing performance to individuals rather than the system of work. One of the things that comes from an understanding of variation due to a system is why it is a mistake. But that is not the only thing. Understanding variation is one of the major pointers to what you should do next to improve, and sometimes more importantly, what you should NOT try to do.

In the 1920s Walter A. Shewhart worked a Bell Laboratories on trying to improve quality in the equipment they produced. He wanted to find a way of telling when you should act on a measure and when you should not. I.e. if you were measuring something in a system when would it be worth your while to chase down that figure to find the source of the problem and when would it be better use of time and resources to do nothing. He came up with a technique called Statistical Process Control (SPC).

The SPC tool comprises of charting a run of measures and also calculating, from the measures, the average and Control Limits. Usually there will be an Upper Control Limit (UCL) and Lower Control Limit (LCL). The theory says that if all the points lie within the control limits then the system that produced the points is "in control". Another way of saying this is that the system is predictable. You can predict that given the system does not change, future points will also lie within the limits. If there are points outside the limits then the systems is "out of control" and therefore unpredictable.

The points inside the limits are said to be from "common causes" and those out side the limits are "special causes". The common causes come from the system and should NOT be acted on. The specials causes come from out side the system and should be investigated and the causes removed. This gives a formula on when it is economic to act and when not.

If you have special causes you need to work to remove them to get the system in control. If the system is in control, you need to work to reduce the causes of variation.

Here is the thing, all systems produce variation. Think of stock markets, sales figures, time between accidents, the number of calls a contact centre receives each day. They all vary and you need to know if that variation is predictable and when something special has happened that needs investigation.

There will be more on variation as we go. But the thing to remember is that variation is everywhere, but that we shouldn't act on every single point until we know that it is a special cause and then we shouldn't rest until the cause is removed.

Best,

Rob

People or System

It is common these days to view people as the cause of performance (or lack thereof) in an organisation.

When performance is low, people get the blame they may even get the sack. At General Electric under Jack Welsh, they had a policy that the top 20% would be promoted and rewarded, the middle 70% would be left as they are and that the bottom 10% would be "managed out", whatever that means. It is also common, therefore, to think that the key to improving performance is to focus on people issues. Issues such as pay, motivation, incentives, team synergy and the like.

It is unfortunate that this is the case because as W. Edwards Deming said, over 90% of performance comes from the system of work. If this is true, and I believe strongly that it is after my working experience as a worker, manager and consultant helping companies apply this thinking, then the managers of today are working very hard on the 10% or less that is the people and not getting much return from their efforts. Actually that is not true, they are getting a return. The return is that staff get demotivated from constantly being motivated while the work does not change.

Managers spend too much time trying to "get them to do it", and not enough time "improving the system of how they do it".

Deming also said, "There is a better way."

The better way is to focus on the system. Study the system with the aid of theory (Lean Thinking in this case) and change it to deliver a better service as judged by your customer.

And here comes the paradox. Your front line staff must be heavily involved in the improvement process. In fact they are the ones who will provide all the best ideas for improvement. If you let them.

This calls for a switch. Management must think differently and this can be hard. Management must stop thinking that they are the thinkers and involve staff in decisions about how the business operations work. Managers must become supporters and resource providers. While they think they are the only thinkers in the business they are sitting heavily on the lid of the well that holds the biggest potential source of improvement that they have access to. That well is in the heads of their staff.

I forget where I read it, but I think it was a quote from a worker in one of the big three US car makers who said, as he was being made redundant, "They paid me for my hands for 25 years. They had my brain for free, but never used it."

Think about it (or not if you are in management!!).

Best,

Rob

Perfection

Finally we come to the last of the five Lean Principles, perfection. Scared yet. You should be. Well you should and you shouldn't. If you are scared because you think that perfection will be a stick that your boss will beat you with then don't be, that won't get him anywhere. If you are scared because you think that you will never achieve perfection then, on this, you will be right.

Perfection is an aspirational goal. You will never achieve perfection, by definition. However, constantly striving for perfection by a process of continuous improvement is the only way to keep your operations as a competitive weapon.

Genichi Taguchi described his Loss Function that says that the further you stray from the nominal value for any process or measurement, the greater the loss. The Taguchi Loss Function goes further to say that the loss increases faster and faster as you move further away from the nominal. Conformance to specifications is no longer acceptable. Only with an eye on perfection can you continue to improve and minimise the loss. By the way, Taguchi described the loss as "loss to society" but it will certainly manifest as a bottom line loss as well as time, morale, customer satisfaction etc. if your service operations are running with waste and errors.

One thing that must be borne in mind is that all systems exhibit variation. "Variation due to a system" and this must be understood before you can judge your system. Getting your measurements of purpose into control is the first best step before aiming at perfection.

Best,

Rob

Create a Pull system

The system of production and service that we have all grown up with is that of "batch and queue" and of "push". Think of it, car makers make as many cars as possible with their big efficient(!) batch mass production machines. They fill parking lots and forecourts with cars and then try to sell them. When they don't sell them, they discount. If you go in to a car showroom wanting a blue car, if they have a lot of green cars to sell they will try to persuade you that green is nice too! Their method of transferring value is to "push" it at their customer.

With Lean Thinking, you should let the customer "pull" value. If the customer does not pull, then do nothing. Wait, you think, do nothing. That's crazy. Why? If the customer doesn't want anything yet, why are you wasting resources guessing what they might want, producing it anyway and then having to shift it at a discount.

Perhaps it is different in services. Not much. All the things we want seemed to be pushed. Insurance, mortgages, pensions are often pre-packaged and pre-built, just like a car. If I want to fly to New York, I have to fly when the airline flies, not when I want to. They push special interest rates and seats on planes.

In order to make a whole system pull, each part has to pull from the previous part. So nothing happens until a customer buys. Think of a supermarket. A customer pulls a cola tin from a shelf (thanks to Womack and Jones and their book "Lean Thinking" for the structure of this) that can is replenished from the warehouse out back, the warehouse is replenished from the regional distribution centre and that centre from the distributor of the cola tin. After the cola distributor has moved that tin he needs another tin and more cola to replace the one he just shifted, so he asks the mix company and the tin company to send more, who in turn need sugar and water etc. and aluminium and steel all the way back to the mining company and the sugar beet farmer. In the case of the cola tin the "pull" system is not perfect, in fact there is still a lot of batch and queue, but they are getting better.

The key is that each step only produces when the next step needs it to.

Remember, before you can have pull you need flow and an idea of where value is in your value stream. Why? Because if you don't flow and your value stream is full of waste, then you won't be able to pull fast enough for your customer. Until you can, you will be better off with an inventory so you can respond quickly enough. That is definitely only a temporary measure though.

In future blogs I will talk of kanban systems and ways of implementing pull, but I just wanted to implant the seed.

Best,

Rob

All about flow

We have identified that value must be viewed from the customer point of view. We have briefly looked at the concept of the Value Stream, the steps that add value in your business. Once we have removed the obvious waste from the value stream we want to look at flow.

Flow happens when work moves, non-stop from one value step to the next. The work does not wait between steps in queues, it does not get bundled up into batches to be processed and there are no rework steps arising from errors or incomplete information.

Flow is a fairly obvious thing to do. Everyone would agree that work should keep moving. But some of the ways of achieving flow are quite counter intuitive. One-piece flow, for example, goes against the batch and queue ethos of mass production. Batching work to all be done at once seems to be more efficient. And it is, but only at that point. So if you wait until you have 20 first-time buyer mortgage forms to process because then you can do them all quickly at once, you may very well be quicker per form to do that processing. But to get that batch together means delaying forms until you have 20. This is detrimental to the end-to-end time for processing the form. The end-to-end time is the measurement that the customer cares about.

So to achieve flow managers and staff may have to let go of some "tried and trusted" ways of being more efficient. The pay off is that work will move faster and the end-to-end time for completing work will be lower, the customer will be happier and the efficiency of the system as a whole will be higher.

Best,

Rob