Sunday, April 10, 2016

Leadership and their Role in Value Delivery

Many process methodologies and frameworks have fundamentally proven components which can identify and promote activities necessary for optimal value, flow and quality delivery within an organization.  There are an assortment of ways these methodologies define value, but all methodologies have one commonality, which they share for long-term sustainable success.  Leadership and leadership support for value based change initiatives are the number one variable for success or failure of any such initiative.   This paper will explore how leadership can promote successful change initiative in your organization and how with thoughtful planning and support you can avoid the most common points of failure.

Traditional command and control structured organizations are often not adequately designed for allowing leaders to adequately promote value delivery.  Traditional organizational structures are also not conductive at turning managers in to effective leaders.  Neither are they designed at empowering their workforce, rather they tend to focus on hierarchical decision making which promotes a command and control mentality.

Value or value creation can be viewed three ways. The customer must value it and be willing to pay for it, It must change the product or service, must be done right the first time.   Many frameworks do a great job focusing on these three areas.  Although frameworks are great tools at enabling value delivery they can only be utilized if the culture and environment fosters and promotes value delivery at every level in the firm, including the individual.  Using Pareto’s law we can deduct that tools/frameworks only represent 20% of the ability to deliver optimal customer value while leadership empowerment and support comprises the additional 80%.  In successful value focused firms 80% of the effort is expended on changing leaders' practices and behaviours, and ultimately their mind set.  Senior management has an essential role in establishing conditions that enable the effort to succeed. Their involvement includes establishing governance arrangements that cross divisional boundaries, supporting a thorough, long-term vision of the organization's value-producing processes, and holding everyone accountable for meeting value driven commitments. This is accomplished through regular, direct involvement and understanding their role in empowering their employees (intellectual capital).   Without this vision any value driven initiative (Lean, Six sigma, Theory of Constraints, agile) will only be seen as the flavour of the month.

Asking yourself “is your customer is willing to pay for the activity you are engaged in” can provide tremendous introspective when leading.  Defining value in any other terms can undermine the potential of value delivery for the firm.  Leadership often takes too much credit in the value of the organization when they often have created little direct value.  The majority of the value delivered is through the product, services or placement of your firm’s competitive advantage.  This means your greatest potential for value creation often resides in the employees who produce your competitive advantage.  Historically to gain the ranks of manager one had to experience learn and work in multiple domains and layers of your organization and rise the ladder through the learning curve of the multiple layers.  This allowed managers to gain knowledge and experience which could be used to effectively lead and make intelligent decisions.   Today management still rises through the ranks but often they lack the domain knowledge they would have previously gained.  Rapid Technology changes make it difficult for management to have the same depth of knowledge as those they manage.  The pace of change today has created a model where leadership is in stark departure from leadership over the last century.  Traditionally organizational structure is a product starting with the industrial revolution with influence from military modelling, which has proven successful between 1900-1960.  A command and control model focuses on management making strategic and tactical decisions for their employees to follow without question.  This method worked fairly well in highly controlled production environments which had little variability in their process.

Peter Drucker the father of Management predicted and then noticed a shift in the early 60's which indicated successful firms are putting more decision in the domain of their employees who work with the product.  Product complexity and efficiency were creating an environment where productions lines where much more complicated and variable.  With the emergence of service based industries it quickly became apparent that traditional management methods were out dated (although this had become equally apparent in manufacturing earlier).  Successful organizations today understand the majority of tacit knowledge with tremendous potential resides in the knowledge worker.  This is the same worker who under earlier models lacked decision making authority and operated as order takers.

 What is the primary role of a leader today then? This question is asked far too infrequently, and when it is asked, the answers are predictable and often wrong. But it is a vital question, as without leadership, empowered employees will never get off the ground. Common replies include setting the vision, establishing priorities, and providing motivation. These are important responsibilities they are out dated.  The essential purpose of a leader is to do one thing: create and empower change. Without a good leader, nothing changes. If a lean program, or any other program for that matter, is failing, it is probably not the fault of the tools. It is failing because of lousy leadership. As you embark on your journey, learn all you can about the concepts, practices, principles, and tools of your choosing. But remember, above all, the goal of these tools is value – and value hinges on leadership who promote and empower that change.

The knowledge workers need to be in control of achieving and promoting change. Therefore, the leader must convey to the worker that they are the ones who own the processes. Leaders need to empower people to have everything in place in order to perform.  Only when they know and are empowered what to do will they feel accountable and take ownership of the processes. In organizations with traditional leadership behavior, there are frequently policy deployment directions from senior management. The mindset of these leaders is not to involve the people at all. Therefore, people can’t relate to the KPIs (Key Performance Indicator) that cascade down because they can’t understand their contribution or the relevance of the KPIs. People in these companies can’t engage themselves in supporting their senior management in delivering results. Consequently any initiative which does not empower or utilize the input of the employee are more likely to fail.

Leaders must focus on commitment to continuously invest in people and promote a culture of continuous improvement.  There is no destination for value delivery models, there's only the journey.  As a leader you should never consider your “Lean” or “Agile” program as complete.  Once you make this mistake you start down the path of contentment and will lose focus on empowering continuous change.  If leader provides a full and continuous investment in their employees then they will in turn see dedication.  All too often when talking to senior management about learning and multi-skilling of employees, they tell us they worry about efficiency.  When people are learning, they are slower and less efficient is often communicated.  Therefore, the view is that it is more efficient to have the specialist work on the specialist things (there are times and places for specialists but that’s for another paper). This might make sense from a traditionalist, but from a product-development-as-knowledge-creation perspective, this kind of thinking is plain wrong and even dangerous. Learning is the major value added activity in product development and knowledge transfer. In the long run, reducing learning will only result in loss in market share and a less valuable staff.  Often management use the excuse that they have to assign resources to satisfy the customer first, which leaves them little or no time to make real change. Their bosses find it hard to argue the point (or use it as a convenient excuse themselves). Value based culture requires you to make the time to make the change—long-term planning and results versus short-term results with little planning.

All leaders have the ability to adapt to the new value driven leadership mindset.  However, not everyone will be capable of doing it without intensive coaching and support from their own leader or experienced external coaches. Even though initially some of these leaders will not feel comfortable in being a leader in this new system, not many of them leave or are forced to leave because, over time, most will understand the value and  adapt to the new leadership system.

Not every leader nor every company culture is ready for this change in leadership mindset. Despite this, many companies have implemented value based tools and techniques for years with tremendous success (Toyota, Boeing, GE) . For example using a lean framework, ‘Center for Ledelse’ interviewed 400+ companies concluding that only 7% had realized more than 80% of their expectation in their Lean program. This only confirms that these companies need to take action now in adapting Lean leadership behaviour and mindset in to their company culture.  Every  leader deserves a chance, but remember you will have to fight a lot of skepticism down that road. You will likely need to convince the team members by showing them what is in it for them personally. People will change when they realize that their leaders really want to empower them. Leaders need to be consistent in what they ask for. They should not reduce their requirements. They should not change their communication. Consistency it required and we must accept the fact that it takes time sometimes many years for this change to fully reflect in the culture.

Dedication is required of each team member to strive for self-improvement. Commitment is needed for each team member to ensure the values and principles will be followed and the team will hold itself accountable. Courage, because the emotions that empowerment invites,  will be unlike anything the employee has ever professionally experienced.  Avoid non-dedicated team members or “partial allocation.” A team member who is in multiple teams does not have the same commitment and shared responsibility as the other members. Part-time people equate to part-time commitment. Part-time commitment leads to team failure. To the maximum amount possible, all members are 100 percent allocated—fully dedicated to their team. The amount of management waste that disappears is amazing.

What you do from this point forward is exciting.  The possibilities for your firm are endless.  There are many sceptics who think value based programs cannot work for them.  They are right, if they keep that mind-set then it can’t.  There is no doubt the concepts presented in this paper can work for you.  From the world’s largest auto maker to the smallest organization you can make this work.  It can work for you, your vendors and even your customers.  Take the time to explore your leadership potential and realize that anything is possible.

Wednesday, December 23, 2015

Automating Lean, Be Careful.

Let me first define what this post isn't.  This post is not arguing that you should not lean up through automation (Although Deming would have a field day on this topic).  Rather I argue that when starting a new lean culture you should not automate the visual indicators (visual controls) of the process.  Visual indicators broadly include any intuitively-easy-to-understand system for monitoring and controlling a process — with examples ranging from kanbans to painted golf balls — but most common is the visual control chart ( The purpose for visual controls in lean management is to focus on the process and make it easy to compare expected versus actual performance. Introducing a Lean lifestyle to an organizational culture is both exciting and frightening at the same time.  Exciting because the firm can squarely focus on value delivery and consider value in a frame they likely have not done.  Frightening because the concepts and activities which are adopted commonly share the culture to the core.   The tendency when in a new process is to try to automate as much as possible.  Don't.

When creating a lean culture the shift which occurs is to frequently use visual controls to measure constraints.  Creating a dashboard on a computer or email provides value but is too easily ignored in a immature process.  Hands on manually created visual controls instill habits that support Kaizen.

In the book 'Creating a Lean Culture: Tools to Sustain Lean Conversions' David Mann suggests.  "The visuals reflect frequent readings of the health of and adherence to the lean design. And, of course, the visuals record misses in the newly transformed process. Establish a standard accountability process through which the misses are converted into actions that sustain and improve on the transformation, as described in Chapter 5. Now you have elements of standard work for leaders that Go to the visuals regularly to verify they are being completed consistently, in a timely manner, and with appropriate specificity. Conduct the standard accountability meeting with the visual tracking charts or their data brought into the session: – Ask about the misses recorded on the visuals. – Make assignments to understand and act on the causes of process misses and system breakdowns, as well as assignments based on your and others’ observations in the area."

Again Mann implores "You might ask: “Aren't all these visuals a lot to maintain?” Not if there is a systematic process for maintaining them. In fact, that is one of the main contributions of standard work for leaders. Team leaders either do or do not make entries on the visual trackers as specified by their standardized work. Supervisors’ and value stream leaders’ standard work directs them to review the visual controls several times daily (or at least once for value stream leaders) for two reasons: one is to verify the visuals are being maintained. The second is to verify that appropriate actions have been initiated when abnormal conditions are identified on the visual controls. When considered in total, there indeed can be lots of visual controls in a value stream or entire facility. But each visual is singular. A single person is accountable for executing it. One or two or more people have specifically designated responsibility for verifying its maintenance and for taking action if it slips. And any of these visual controls is simple, straightforward, can be interpreted at a glance, easily audited, and diagnosed. Put that together with the simple, unambiguous definition of responsibilities for maintaining and using the controls and the system looks much more manageable, as it is in actual application."

From an IT perspective, visual controls might seem like an embarrassing return to the information Stone Age. Visuals are usually not very snappy looking because they are maintained by hand. People are actually counting things (how many pieces do we expect in this load; how many are actually in it?) and writing them down. Have these people not heard of computers and barcode scanners?

Lean processes are designed not to rely on the extras stashed away in conventional systems to bail things out in a pinch. Even so, things go wrong in lean systems just as they do in mass systems. By design, a lean process has little unaccounted-for slack in the system to fall back on. Because of that, lean processes require far more attention to disciplined cycle-by-cycle operation to ensure the process stays in a stable state. Otherwise, the process will fail to hit its goals and fail to deliver the business results so important in any kind of production system. Paradoxically then, in many ways, simpler lean systems require more maintenance than conventional systems.  The way to stay focused on maintenance is to manually control the indicators and constantly define what's moving the dial.

Overall, the lean management system favors hand-completed visual controls because of its bias toward pitch-by-pitch focus on process and the importance of everyone involved in a process having timely information about how that process is performing. When information is available to only a select few, whether managers or specialists, only those few can take responsibility. Indeed, only those few have the information base for thinking about why the process performed as it did, what the causes of that performance might have been, and what might be done to eliminate the causes of interruptions or to improve performance from its current level.

When thinking about visual controls think about their purpose.  What habits are you trying to control and what habits are you trying to break?  How different is accountability when controls always visible and updated?  Remember this is uncomfortable because it's new.  Often people accuse these indicators as "common sense".  We know they aren't common sense otherwise most organizations would organically be using them.  Visual controls support visual lean management.  While lean management is the number one driver for lean success, visual controls server as a fuel lean practitioners can use to build their lean culture .  

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