LMJ July/August 2015

THE MINISTRY OF LEAN Exploring the place of lean in government services Organisations and interviews featured in this edition include: Commonwealth Bank of Australia, Care Quality Commission, TriHealth, Newsprinters UK, Academi Wales, Joe Bell, Bill Bellows, Valeocon Management Consulting and Nycomed.

IN THIS ISSUE:

Spreading the word: LMJ visits Newsprinters UK, the Scottish printing presses recently awarded the Shingo Prize.

Sharing the caring: The Care Quality Commission (CQC) is the independent regulator of health and social care in England; they talk to LMJ about their lean practices.

Wales: the land of the lean: We interview the head of continuous improvement and change at Academi Wales, to see how you go about the mammoth task of leaning an entire country.

EDITOR’S LETTER

Dear reader,

Governments. Love them or loathe them they’re awfully big these day, aren’t they? They’re often the largest employees in a city and seem to spawn yet more and more agencies and tentacles, reaching out. Now, we’re not getting political here - we’ve no desire to start a debate about small vs large government - but with such a proliferation of services in the modern day, it’s no wonder many are looking to lean to help them out.

Whether it’s attempting to co-ordinate the work done between departments and agencies on projects or looking to cut costs (but not jobs) in other areas, lean is now ensconced in the public sector, and in this summer double issue of LMJ we want to explore the pitfalls and positives of such a relationship.

@AndrewPutwain

EDITORIAL

Commissioning editor Andrew Putwain

a.putwain@hennikgroup.com

Managing editor Victoria Fitzgerald

v.fitzgeral@hennikgroup.com

Editorial director Callum Bentley

c.bentley@hennikgroup.com

DESIGN

Art editor Martin Mitchell

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Designer Alex Cole

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We have head of lean from Academi Wales, Tony Mizen, to discuss lean in the civil service. A quick way to describe Mizen’s role is head of lean for the whole Welsh government. So we asked him: how exactly do you lean and entire country? The answer? Very well.

In other government articles we have an interview with Darren Spark from Care Quality Commission. This is the regulation body who monitor healthcare providers in England and Wales, to maintain standards and procedures are enforced. In times of austerity and change in the healthcare system, lean is more important to the organisation than ever for, so we explore how lean has helped this multi-faceted operation to sift through the bureaucracy.

We are joined by Bill Bellows for his second Out of the Blue column.

Bill joins us for topical comment and analysis on those issues in the lean community that affect us all and how we can look at them from a different perspective.

And just in case we weren’t spreading the love: we’ve got lean in healthcare from the nurses’ perspective, with Lisa Humphrey and Ryan Francis, from Ohio-based TriHealth, to explain how they maintain standards and push for excellence.

On top of this, the case study this issue is from Panalpina. A lean orientated logistics company who have been doing wonderful things of late. They took on a new scheme called knowledge transfer partnership (KTP) and have seen amazing results. It’s a partnership between education, industry and government and they’ve come to sing its praises.

Away from civil service and government I travelled up to Glasgow one more to visit News UK’s Motherwell printing presses. Part of the Rupert Murdoch Empire, this site was recently awarded the Shingo Prize. We were shown around and given all the inside gossip on how you win such an illustrious prize.

As usual, we also have a roundup of news, events and social media activity. This issue’s lean online focuses on some of the new quick-read blogs going up on the LMJ website- so whet your appetite for more with some of the best.

We hope you enjoy this issue and happy reading.

Andrew Putwain, Commissioning Editor.

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C ONTE NTS JULY/A UG 2015

C O N T E N T S

04 Introducing the editors 05 Lean News 08 Introduction

Paul Hardiman discusses lean and governments in this month’s introduction.

PRINCIPLES & PURPOSE 09 Nurse unit challenge: Practical expansion of best practice mindset

Lisa Humphrey and Ryan Francis explain how TriHealth has moulded its nursing team into a flawless department of lean champions.

28 SECTOR FOCUS Civil Service - Wales: the land of the lean

Tony Mizen, head of continuous improvement and change at Academi Wales, talks to LMJ to explain how you go about the mammoth task of leaning an entire country.

30 FACTORY VISIT Spreading the word

LMJ editor Andrew Putwain visits Shingo Prize winners, Newsprinters UK to see how the printing presses have led the way in implementing change and fighting off loss in a declining industry.

12 Top 8 burning issues in lean LMJ discusses the big deals for lean in the future.

14 A roadmap for developing functional strategies

Thomas Bertels and Charles Depasse explore the strategies needed for a successful company.

18 Bowtie – a fashion revival

Max Cardew, from Commonwealth Bank of Australia, follows up on his articles on finance last year with a piece on bowtie analysis- what is it and how it might be subsumed by OpEx.

22 CASE STUDY KTPs: Generating innovation in lean programmes

The team from logistics firm Panalpina present us their story of how a joint programme between academia, government and industry led to a positive change in the company’s lean transformation.

33 BOOK REVIEW Work Rules!

Joe Bell, of Evoke People Development, presents his first book review of Work Rules! by Laszlo Bock. Exploring what lean can learn from Google’s practices.

35 LEAN ONLINE

We bring you all the latest lean news and discussion from the world of social media.

36 OUT OF THE BLUE Utopia: next step or last stop?

The second column in Bill Bellows new column focusing on fresh ideas and new perspectives delves in the idea of perfection: attainable?

38 EVENTS

Find out about the latest lean events coming your way

25 SPECIAL FEATURE Sharing the caring

LMJ interviews Care Quality Commission’s Darren Spark. CQC are an independent body associated with maintaining standards and regulation in the healthcare sector.

Elizabeth House, Block 2, Part 5th Floor, 39 York Road, London, SE1 7NQ T +44 (0)207 401 6033 F 0844 854 1010 www.hennikgroup.com.

Lean management journal: ISSN 2040-493X. Copyright © Hennik Group 2015.

www.leanmj.com | July / August 2015

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INTRODUCING YOUR EDITORS Our experienced editorial board members contribute to the journal providing comment against articles and guiding the coverage of subject matter.

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JOHN BICHENO

TORBJØRN NETLAND

University of Buckingham, United Kingdom

Norwegian University of Science and Technology (NTNU), Norway

RENÉ AAGAARD

BRENTON HARDER

JOSEPH PARIS

Novo Nordisk, Denmark

Commonwealth Bank of Australia, Australia

Operational Excellence Society

JACOB AUSTAD

PAUL HARDIMAN

NICK RICH

LeanTeam, Denmark

Industry Forum, United Kingdom

Swansea University, United Kingdom

BILL BELLOWS

SARAH LETHBRIDGE

STEVE YORKSTONE

President, In2:InThinking Network

Cardiff Business School, United Kingdom

Edinburgh Napier University, United Kingdom

DAVID BEN-TOVIM

JEFFREY K. LIKER

Flinders Medical Centre, Australia

University of Michigan, USA

More information on our editorial board, their experience, and views on lean is available on the LMJ website: www.leanmj.com

LMJ USA: OIL PRODUCER GOES LEAN Oil producer Hess Corp has turned to lean to cut costs and boost production as crude oil prices lag.

Used by only a handful of other oil producers, the move has shaved roughly $400,000 off the cost of each North Dakota well in the past eight months, a saving that comes even as Hess adds more sand and frac stages on each well.

It has also sharply cut the time needed to drill a new well.

Hess hopes to emerge from the oil price slump stronger than peers. The New York-based company believes by using lean its 1,200 operated Bakken wells can remain profitable with U.S. crude oil prices above $40 per barrel, roughly $9 below current levels.

A Hess spokesperson also said it could go so far as to survive with oil around those levels for the next eight years.

“This stuff really does work when you have a culture that is behind it,” Hess president Greg Hill said in an interview. “We haven’t even scratched the surface.”

Hill, who joined Hess from Shell in 2009, has data to back up his use of lean.

Since the first quarter of 2012, the company’s well costs have dropped 47% in the Bakken to about $7.1m.

For 2015, Hess hopes to cut that to $6.8m.

In the same timeframe, the time spent to drill a new well has dropped 51%.

Hess management has been encouraging employees to eliminate waste by focusing daily on what did and did not work and quickly learn from mistakes.

Hess relies on Halliburton, Baker Hughes

and other contractors to perform the heavy lifting needed to extract oil. As part of finding what methods work best, Hess saw using expensive ceramic proppant as part of its fracking process was not cost effective.

“We are more optimistic and more excited than we’ve ever been on the Bakken,” Hill said.

NETHERLANDS: MENLO AWARDED LEAN GOLD Menlo Logistics (Menlo), the global logistics and supply chain management unit of Con-way Inc.has achieved a Lean GOLD certification at its Maastricht facility for its logistics operation on behalf of medical device manufacturer, Physio Control.

The lean certification programme acknowledges attainment of set, globally recognised standards for lean principles and practices. It provides companies with a benchmark for achievements and a common roadmap for continuous improvement and workforce development. GOLD certification validates the process of continuous improvement as it is applied throughout an operation and includes education and training in all aspects of lean transformation across the entire enterprise.

In announcing the accolade, Paul Rasmusson, physio controls director, international operations and service, EMEA and APAC commented, “For Physio-Control, the certification proves our

logistics for EMEA is managed efficiently and with a high focus on continuous improvement. This can be seen clearly through the service levels provided and the cost moving down over time since the start in 2012. The certification means the Menlo operation in Maastricht is managed through lean principles at the highest level of maturity.”

Among other criteria the GOLD level assessment includes; standardisation of processes; devotion to continuous improvement manifested through a number of kaizen events and tangible savings; quality assurance through root cause analysis and problem elimination and work organisation according to the 5S principles of lean.

The lean auditor commented on the Maastricht team, “This group is family, as each have shared their learning while continuing to apply the lean techniques in making the site a true leader in lean deployment.”

www.leanmj.com | July / August 2015

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LMJ

CANADA: LEAN COUNCIL ACCUSED OF OVER-SPENDING In 2014 Manitoba’s government announced a lean council designed to improve services while trimming costs of government departments.

But critics questioned the results of that quest after the 2015 budget projected a $422m deficit and revealed $207 million in overspending on core government departments over the previous fiscal year.

Finance Minister Greg Dewar noted the council is still active. He credited it with helping decrease the size of the government’s office-space footprint by 40%, which is expected to save at least $2m this year.

Vern Campbell, who teaches lean management principles at the University of Manitoba and does consulting work for the province, explained first-year savings are a reasonable amount given the size of the province’s budget. Campbell estimated a large organisation can expect the lean process to take about five to 10 years to trigger long-term sustainable waste reduction.

The province also managed to cut department of health costs by $6m, though spending for that department is still projected to rise by 4.3% this year.

Progressive Conservative leader Brian Pallister said the lack of mention of the council in this year’s budget raises doubts it triggered the savings once expected.

Rob Despins, chair of the lean council, said his group has trained and advised deputy ministers on waste reduction measures. He expects the cultural change will take time to filter through the provincial government.

“What have they done in the last five years? Watched waste grow,” said Pallister. “The announcement was done purely for show.” His party has repeatedly called for a 1% total expenditure cut, with reductions varied to reflect each department’s needs.

“Your focus in the short-term shouldn’t be the quantitative cost savings you have,” said Despins.

“There’s going to be a little bit of a lag between activity and seeing the cost come out of your general accounting system.”

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Despins added service improvements due to the new system are easier to measure, such as some billings previously processed in 90 days now being completed in 20 days.

Premier Greg Selinger insists his government is committed to the process. “The lean council is working with all members of our public sector to find ways to be more efficient.”

USA: LEAN RESEARCH FOR IMPROVED INTERNATIONAL DEVELOPMENT To help alleviate poverty, representatives from MIT D-Lab and Tufts Fletcher School focus on respectful, human-centred research practices in global development.

When a student at the Tufts University Fletcher School of Law and Diplomacy travelled to rural India on a research trip to interview farmers, she brought a nearly 200-question survey that took up to five hours to conduct and complete.

“We were wasting hours of the farmers’ time,” she shared at the Lean Research Lab, an event organised by MIT and Tufts.

“It was fundamentally intrusive and disrespectful research.”

What this student described is exactly the kind of research advocates at MIT, Tufts, and beyond would like the global development community to rethink and move away from. It’s why they founded the Lean Research initiative last spring.

Championed by faculty and researchers at MIT D-Lab, the Tufts’ Fletcher School, and Feinstein International Center, lean research is defined by the group as respectful, relevant, rigorous, and right sized; taking a new approach to research conducted for international development.

Nearly 40 researchers from academia, donor agencies, and prominent nongovernmental organisations have now signed onto the Lean Research Declaration, showing their support for the call to

UK: DRUG COUNSELLORS ACHIEVE CI EXCELLENCE Phoenix Futures has successfully achieved five stars following its recent Recognised for Excellence (R4E) assessment.

Phoenix Futures provides services for people with drug and alcohol problems. It offers services within community, prison and residential settings in England and Scotland.

Previously awarded five stars, this achievement demonstrates a strong commitment to continuous improvement, operating at a very high standard of performance.

improve research practice and intent to incorporate lean principles in their own research work.

After a few days of surveying, the researcher who shared her example from India became frustrated and uncomfortable asking farmers so many questions. She took the survey back to her research team with a request to cut the survey down.

And she didn’t stop at having a question cut here and there.

Together, the research team brought the survey completion time down from five hours to two.

“The type of data we ended up collecting was probably as good as what we were seeking in the first place,” she said.

Examples were shared by nearly 50 academics, researchers, practitioners, and donors from leading institutions in international development who came together for last week’s Lean Research Lab, the second convening organised by the MIT and Tufts Lean Research initiative.

At the event organisers introduced the lean research framework and engaged participants in a series of sharing and learning exercises. They also released a draft working paper on lean research for public comment and provided opportunities for further engagement after the event.

Through its expertise it is able to support service users at every stage of their recovery; this includes engagement on the streets and in communities; harm reduction at drop in centres; structured day programmes; residential rehabilitation; supported resettlement and services within prisons.

Phoenix Futures also runs several unique personal development programmes to complement its core services, which helps its service users gain skills, confidence, motivation, and employment.

The first Phoenix House opened its doors in London in 1969, offering therapeutic community based residential rehabilitation.

It has grown over the last four decades from a single residential service to a national organisation with nearly 90 services across community, prison and residential settings.

EFQM Recognised for Excellence is Europe’s leading recognition programme for organisational performance, and forms part of the EFQM Levels of Excellence.

If you have any news you think would interest and benefit the lean community please let us know. Send submissions to the commissioning editor Andrew Putwain: a.putwain@hennikgroup.com

www.leanmj.com | July / August 2015

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INTRODUCTION WRITTEN

BY

PAUL HARDIMAN

Several commentators have suggested complex adaptive systems theory is an aid to understanding changing the NHS. In order to change the organisation’s inertial momentum, a massive and sustained intervention is needed at every possible level until the phenomenon of learning excellence emerges and sustains itself. This doesn’t mean currently, unlike the US, lean thinking has no profile in UK healthcare.

There were 100 entries for the 2014 Lean Healthcare Awards sponsored by the Lean Healthcare Academy, for example.

W

ith the Conservative election success, attention is focusing on the substantial public expenditure cuts the Chancellor has already announced and the detail of which will emerge in the June budget.

While we know the National Health Service (NHS) will get increased funding, the five year forward vision also proposes ambitious productivity gains.

The anticipated extra demand for healthcare over this Parliament should be met mostly by productivity gains with a much smaller level of increased funding to help make this happen.

The leadership challenges implicit in this strategy are obvious. The Kings Fund, an English health charity that shapes health

and social care policy, has published a report proposing the NHS needs a special kind of leadership - The practice of system leadership, being comfortable with chaos, by Nicholas Timmins. He explains a critical skill for the NHS’s future is the ability to work across services and organisations to meet the complex needs of those who rely on different agencies. This echoes an offering from the prestigious Harvard Medical School where the Safety, Quality and Informatics Leadership one year programme develops participants’ knowledge of safety, quality and informatics together with the leadership skills for effecting change. Unsurprisingly this programme involves each participant delivering a palpable improvement project.

This doesn’t mean, unlike the US, lean thinking has no profile in UK healthcare

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In the wake of the mid-Staffs scandal, David Cameron asked Don Berwick, a US expert in health systems development to report to him on patient safety (Berwick has also advised Blair and Obama.) Berwick explained reduction of patient harm requires clarity and constancy of purpose among all leaders, from the front-line to the Prime Minister. Furthermore leaders need first-hand experience of how systems work at the front line. Berwick’s stress on constancy of purpose and senior management experience of the front line will come as no surprise to readers with experience of classic lean implementations in manufacturing.

Indeed, a couple of years earlier Dan Jones had reviewed his experience of working on lean projects in the NHS and had come to a similar conclusion.

The strategic issue for the NHS is how the leadership lessons, capabilities and organisational learning from successful lean projects in the sector can be rapidly spread much more widely across the whole system?

This approach is almost certainly unavailable in other parts of the public sector which must absorb the full force of the planned public expenditure reductions. In those areas there will be no absolute increase in expenditure as is the case in the NHS and there is little evidence lean has made the same progress in other parts of the public sector it has in the NHS.

PRINCIPLES & PURPOSE

Nurse unit challenge: Practical expansion of best practice mindset READ ABOUT: Ohio-based healthcare providers How nursing care can be improved with easy, measurable steps Maintaining market lead and reputation

T

Lisa Humphrey and Ryan Francis, both senior performance improvement consultants, from TriHealth join LMJ to show how they’re moving with lean in healthcare.

Creating a culture where staff is empowered to enhance processes is critical to sustain market leadership

riHealth, a Cincinnati healthcare provider is comprised of five hospitals – including the cities’ number one and two hospitals - Good Samaritan and Bethesda North, a strong network of ambulatory care, physician practices, urgent care centres, specialty institutes, and over 12,000 employees - including more than 540 physicians.

by implementing best-practice, and their effective use is demonstrated by Magnet certification. Nonetheless, changing care standards and complex care needs present significant challenges for staff every day.

A prime example, harried nurses and their supporting staff have limited time to maintain high-functioning, standardised work environments, with responsibilities clearly identified by each role.

While accolades provide affirmation of TriHealth’s best practices, creating a culture where staff is empowered to enhance processes is critical to sustain market leadership. Success hinges on equipping teams with lean and change management training to sustain a forward thinking organisation. Success begins when care providers share a vested interest in patient centeredness as a guiding principle. At TriHealth, nurses demonstrate forward thinking alignment

NURSE LEADERSHIP CHALLENGE:

TriHealths’ nurse leadership challenged each unit at Good Samaritan and Bethesda North Hospitals to develop a consistent approach aligning staff duties by roles, and ensuring work spaces were effectively organised and sustained using lean principles.

Four were identified and, if improved, could create meaningful impact:

www.leanmj.com | July / August 2015

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NURSING EFFICIENCY LISA HUMPHREY & RYAN FRANCIS

each piece of equipment, and coloured tape and pictures were posted as visual reminders. In another unit, the storage room was in such disarray nurses noted on average 10 minutes was spent searching for supplies before determining a particular item was not in the room.

After undergoing 5S, nurses could locate needed equipment within seconds.

Figure one: Before and after 5S

1. Reduce frequent searching for supplies and equipment using 5S 2. Realign duties among staff so nursing only performs tasks at top of their license 3. Standardise roles, specifically patient care assistants (PCAs) across all units 4. Improve unit staff communication

COUNTERMEASURES ACTIVITIES

Once formed, teams quickly collaborated to identify key wastes to target, created

Communication in patient care units are normed and staff do not realise the negative impact of uncoordinated information sharing

Figure two: Med cart reorganisation using 5S, before and after

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countermeasures, and presented each countermeasure to all peers for feedback and buy-in prior to piloting. A team was led by the lean facilitator simultaneously at both hospitals. After five weeks, the facilitator moved on to the next two teams, until all 10 medical-surgical units had undergone lean efforts. Solutions developed by one team were carried forward to subsequent teams to provide standardisation across the service line.

5S ACTIVITIES

Among all work activities, countermeasures prompted by 5S activities created quick-win appeal, providing teams with feedback their efforts created meaningful results. When assessed by staff during the waste walks, teams were often surprised at wasted time and travelling associated with the search for frequently needed supplies and equipment. For example, nurses in one unit spent over one hour per day searching for the patient vitals machine.

Standard locations were designated for

Carts used throughout the shift by each nurse to store smaller frequently used supplies posed another 5S challenge.

Carts were not organised, lacked standardisation, and nurses rarely found needed supplies. The team designated specific supplies, set par levels, and identified specific bins for each supply (see figure two). At the end of the shift, unit coordinators (UCs) audited each cart to ensure compliance. This countermeasure alone saved one unit five hours per day. 5S activities on all units drastically reduced time and frustration associated with finding resources, and allowed caregivers to spend more time with patients.

ROLE STANDARDISATION

A key goal aimed to increase time for RN and PCAs to perform bedside care, and align roles and responsibilities for RN staff to operate at the highest skillset of RN licensure. Each unit realised RNs were performing many duties that could be shifted to the PCA, and many duties lacked standardised work. Teams

Figure three: PCA responsibilities by shift

PRINCIPLES & PURPOSE

Figure four: Infrequent VS/BS documentation by PCAs and impact on RN medication dispensing

Figure five: Nursing efficiency: Hours and dollars converted to value-add

Green boxes = Avoidable waste if PCAs frequently Document VS/BS

Additional issues raised by most units centered on PCA habits to hand-write vital sign and blood sugar results on paper instead of immediately entering it into the electronic medical record.

This wasted RN time in tracking down the PCA to get the results each time they gave medication (see figure four).

To improve, units standardised the expectation for all PCAs to document results in real-time, and realised increased efficiency in daily work.

created detailed standard lists of PCA job duties to be completed hour by hour (see figure four). Standardising work by hour of day also had an unexpected impact.

When PCAs ensured all patient needs were met at the end of the shift, the next shift could get all startof-shift work (such as assessments and medication administration) completed without interruption from patient call lights. This inevitably served to ensure the patients’ needs were met and medications were administered without delay.

COMMUNICATION:

Communication pathways in patient care units are normed and often staff do not realise the negative impact of uncoordinated information sharing. For example, one unit sent patient call lights to PCAs the first half of shift and to RNs the second half, so each role would have uninterrupted time to perform tasks. Until performing their waste walk the staff did not realise the number of interruptions this process created. Often, patients required immediate care only provided by the person not overseeing call lights at that moment. As a countermeasure, the unit reorganised the call light system to have the UC receive all patient call lights and route to the appropriate staff.

During waste walks, teams were surprised at wasted time and travelling associated with the search for frequently needed supplies and equipment

RESULTS AND LESSONS LEARNED:

The lean projects across all units converted over 49,000 hours of staff time from non-value added to valueadded, representing over $1.6 million in salaries. Figure five outlines savings by countermeasure and nursing unit. The following represent key learnings worth sharing for other teams beginning a lean review of nursing units: Teams embarking on this type of project must educate staff in change management and lean methods to avoid staff jumping to conclusions and to create meaningful change The ability to improve work areas depends on team buy-in to want an enhanced state; the process owners must help create the solutions. Tell them the general needed outcome, but let them find out how to get there Managers must make a significant time investment in communicating and follow-up monitoring for staff behaviours to become solidified Healthcare must embrace lean methodologies. We lag other industries and efficiency gains are needed to operationally align with payment reform initiatives.

www.leanmj.com | July / August 2015

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Top 8 burning issues in lean 1. AUSTERITY:

After the Conservative’s recent election victory here in the UK, we were promised £12bn worth of cuts and savings made to the welfare budget. With lean still often seen as nothing more than a euphemism for making redundancies, will we see ‘efficiency’, ‘cost saving’ and other terms trotted out during this process?

In this month’s issue we spoke about austerity and the changes it’s brought to the civil service with several government workers, but were continuously told the articles couldn’t go ahead unless, we removed all mentions of austerity and the ‘top-down’ government enforced ideas on lean.

We can’t say if those were because of nervousness about elections, or if they didn’t want their efficiency programmes being mentioned in the same breath as austerity, but it points to a worrying trend of lean as a pure money saving operation.

2. ENGAGEMENT:

The fact lean is still not associated with staff engagement is an annoying problem we must tackle.

Lean removes the stressful, frustrating, and just plain pointless, time delays that make every one’s working day, well, work.

If we focus on listening to staff and encouraging participation it will be better in the long run.

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LMJ delves into the world of all things CI, LSS and efficiency to see what the hot topics are. Agree/disagree? Feel we’ve missed something obvious? Get in touch and air your voice.

3. THE ROLES:

Related to this is a pressing problem that occurs in every workplace globally; namely no one actually understands anyone else’s job in their company.

“What does he/she do all day?” is something we all hear. It strikes of misunderstanding, ignorance and sometimes, hostility. Workload, credit for a job well done, and - even worse - pay disparity, are often at the basis of it. One way of creating a more harmonious, and therefore efficient, workplace is to all sit down and discuss what each person’s role is.

Not only will this then lead to less office-corner gossiping but it’ll help create a more productive workforce: no longer will you have to dither with a customer on hold as you have to ask which of your colleagues does exactly deal with the query you’ve been landed with.

It will build inter-relationships department, encourage more communication and open up a door to more business. How many business opportunities have you missed out on over the years because you weren’t even aware someone in your organisation delivered the good/service a potential client was after?

PRINCIPLES & PURPOSE

4. BACK OFFICE LEAN:

Factory floors have been leaned to the hilt. If there are factories out there that haven’t been leaned, we wonder if they’ve been under a rock.

But the latest phase is to go back office. At LMJ we fully support this, as it’s not fair for the workforce to be sending out products at huge quantities and quality if the company’s administration practices means they can’t be paid on time, for instance.

In this month’s issue we spoke about austerity and the changes it’s brought to the civil service with several government workers

5. IT:

A huge potential area for lean. The struggles we all have of (usually outsourced) IT related issues.

IT is growth industry like no other, and as the profligate continues, lean has to show it can modernise and look forward with the best.

Not to mention those gremlins that effect IT issues are ripe for the low-hanging fruit lean loves to tackle. Other areas desperately in need of a leanisation: train companies and internet providers (anyone got any ideas as to why it takes six weeks to set up a new connection?).

6. CONSULTANTS:

Look, we have no issue with them here at LMJ (we rely on them to provide content), but there are a lot of people out there who just want to make money off lean. During the recent Lean Top 25, several of those nominated spoke wearily of their involvement in lean and how they were hesitant to say if this was a positive.

There is an industry built on coaching and engagement, and while the end results of this are usually beneficial to the company, it’s no secret 80% of lean transformations fail. Some of the most successful lean operations LMJ has visited in the recent past have had no consultants involved at all. Just one diligent employee on a mission, or a group of passionate employees bending their colleague’s ears until they listen to their ideas.

We don’t believe consultants should be ignored, or that they don’t provide invaluable services, but the sheer volume of cannot be efficient. Companies should put in some serious thought to their own intentions and needs before they engage their services. A fresh set of eyes can be a bonus but often they can make changes on their own without any need of a third party.

7. ACADEMIC-ISATION:

Lean in schools. Teaching lean. Lean for the youngens.

It’s great lean and other continuous improvement ideas are coming to those people still in education before they’ve hit the workforce (see our May issue for more on this), but it’ll be interesting to see which way the creation of ‘lean academic programmes’ takes. Whilst they are now taught as masters programmes, lean in senior secondary schools could be more vital.

And what of the teaching procedures of lean? What aspects do we want to focus on? Should we treat lean as a science? As a tie-in to a business course, like a management studies module? Or another way, focusing on people in a psychological way might be a chance. But will this be for the good of lean’s reputation?

8. GLOBALISATION AND CULTURAL BARRIERS:

Recently discussed in our June issue, on the topic of National Instruments Hungarian manufacturing facility: American positivity and optimism mixed in with eastern European rationalism. It proved a bumpy ride.

It’s great lean and other continuous improvement ideas are coming to those people still in education before they’ve hit the workforce

Lean originated in Japan, a deeply conservative society, but often countries around the world don’t take well to questioning traditions and authority. Hierarchies are in place for a reason and people turning up to the workplace and demanding communication and openness became the way forward, are often seen as rude.

Lean must weave through diplomatically and make sure it doesn’t create a hegemony and can respect cultural differences, while also leading the chorus for change.

www.leanmj.com | July / August 2015

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A roadmap for developing functional strategies Thomas Bertels, the managing partner of Valeocon Management Consulting and Charles Depasse, the former head of HR and operations for Nycomed explore the strategies needed for a successful company.

C

READ ABOUT: Developing corporate strategies KPIs and the need for a good HR department Getting input from the right people

orporate strategies are important to define the overall direction for an organisation. But how do we make sure the strategies for the various functional areas (manufacturing, human resources) are aligned with the overall direction of the firm as usually defined by its corporate strategy? This article describes an approach for formulating a strategy for a functional area that is developed and owned by the functional leadership team and helps address the key question: How do you create a functional strategy that effectively supports the corporate strategy while also achieving the specific operational objectives the function is expected to meet?

ALIGNMENT AND OWNERSHIP

The reality in most large organisations is the strategies for the various functional areas are rarely well aligned with the overall corporate strategy and other functions. Not only does a lack of alignment result in wasting resources on activities and projects that do not support the overall strategy, but in many instances the lack of alignment can hinder the execution of the overall corporate strategy.

The process presented here includes both developing the functional strategy, and ensuring its execution.

By actively involving the functional management in the development of the functional strategy, key managers of

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PRINCIPLES & PURPOSE

Figure one: HR functions

KPIs are critical to track progress against the overall strategy and to help those leading initiatives keep score on how they are doing

that function take ownership of specific work streams and initiatives, ensuring full commitment during execution.

The main stakeholders, e.g. the CEO, peers and other internal customers give their input as to ensure the function is fully geared to meeting their key expectations.

FROM CORPORATE STRATEGY TO FUNCTIONAL OUTCOMES

When developing a functional strategy different sources of information can be used. In most cases the corporate strategy is the first input. In addition stakeholder surveys as well as benchmarks or SWOT analysis can be used.

both emerging markets expansion and mature markets consolidation was clarified. Training in project management and building partnering skills to support was prioritised to support the corporate strategy.

SOLICIT STAKEHOLDER INPUT

Getting input from the CEO and peers on the leadership team is crucial not only to define the expectations, but also to ensure stakeholder buy-in and support.

Asking what works and should be further pursued, what new activities should be pursued can yield crucial insights on where to focus.

The reality in most large organisations is the strategies for various functional areas are rarely aligned with the overall corporate strategy

Figure two: Satisfaction with services received from HR

The key is to ensure the expectation for the function is clearly defined as to meet the expectations of its main customers.

Take the example of a corporate HR function in a mid-size pharmaceutical company: The corporate strategy outlines six strategic objectives. What is the contribution HR needs to make to support the overall strategy?

On the left the corporate strategy, on the right in the corresponding human resources strategy that was developed In the above example, through the HR strategy development, the apparent contradictory role for HR to support

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DEVELOPING FUNCTIONAL STRATEGIES THOMAS BERTELS

Figure three: Framework of importance

In the example of the HR department, the vice president responsible for HR launched a general employee survey to assess to what extent the function was currently meeting employee expectations as well as identify specific gaps that needed to be addressed. The general survey helped to identify specific areas that needed to be addressed.

Figure four: Current perception of HR

Gathering these inputs helps to ensure the functional strategy is grounded in the current reality.

DEFINE STRATEGIC INITIATIVES – MUST ACHIEVES

When it comes to functional strategies, there is typically no shortage of ideas for what could be done. But oftentimes there is only limited capacity to execute on all the ideas.

Focusing on the must-achieves based on stakeholder input was found crucial to focus on the right things and avoid resource drain.

A strategy development process also provides an opportunity to challenge the work currently being done by the

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function, prioritise the options and ensure buy-in for the chosen initiatives.

Figure three outlines the framework used to evaluate the relative importance and customer satisfaction impact and identify the vital few initiatives the HR function should undertake.

Note in the above how employee branding is positioned low on the chart. Before this functional strategy exercise

PRINCIPLES & PURPOSE

Figure five: Outlines the structure used to provide periodic feedback

personal responsibility for an initiative and to seeing it implemented.

These initiatives should come in parallel to the normal delivery activities of the function, and should require no or very little additional resources, thus fitting within the existing budget.

Some of these initiatives might be of a limited time to a few months while others could become part of a continuing improvement programme.

AGREE ON PERFORMANCE KPIS

KPIs are critical to track progress against the overall strategy and to help those leading specific initiatives keep score on how they are doing. Figure four shows the framework used for assessing the progress made in improving how HR is being perceived by the business.

was done, it was one of the main activities the HR function wanted to engage in. With the insight of this analysis the HR function could refocus on items of higher importance to employees.

CREATE A FEEDBACK PROCESS

CHARTER IMPLEMENTATION PROJECTS AND ACTIONS

When it comes to defining the actions, the ‘who’ is as important as the ‘what’. At its best, strategy development is an invitation to lead – by asking: “Where can you contribute both in your current role and through project work?”

The preferred way to achieve this is to make the strategy development a team effort by involving the management team of the function and to have each member take Figure six: Things to remember If you don’t have clarity about the overall business strategy - get it.

Get feedback from your peers on what is working well and what isn’t.

Clearly define a functions task and measurable outcomes.

Link your functional vision to the company’s vision and mission.

Co-create the strategy with your direct reports to build the team, create ownership for implementation and identify stars.

Creating KPIs and setting up feedback mechanisms helps to maintain alignment and track progress

Developing a functional strategy aligned with the overall needs of the business is one thing. As the business develops and circumstances can change over time, maintaining alignment is important.

In addition to a robust set of KPIs, a business steering committee can be a very effective mechanism to maintain alignment and gather feedback. If the functional area has multiple layers (for example global, regional, local), creating a forum for the entire functional community is also a good option. Figure five outlines the structure used to provide periodic feedback.

CONCLUSIONS

A good process for creating a functional strategy delivers both alignment and ownership. Figure six summarises the key lessons learned in the process of developing functional strategies.

Starting with the corporate strategy and gathering input from other functional areas defines the outcomes the strategy must help accomplish and helps to focus on the needs of the internal customers. Inviting the staff to lead and take ownership for specific projects and initiatives is critical. Creating KPIs and setting up feedback mechanisms helps to maintain alignment and track progress.

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Max Cardew is a senior manager of business productivity improvement with the Commonwealth Bank of Australia.

He comes back to LMJ after his articles last year on the role of lean in financial organisations.

L

ean six sigma (LSS) initiatives experience a number of challenges when deployed within knowledge management processes, with operational risk being no exception. One major hurdle is the significant variation with interpreting risk ratings and control classifications, which are then officially recorded in the enterprise risk management system.

community are fairly accepting to this variance and consider the risk rating process as more of an art than a science.

This variation on its own does not necessarily impact the corporation’s customers directly, however, there are substantial maintenance, governance and reporting regimes hanging off the back of these all-important decisions.

The doctrine of behavioural financea relatively new field that seeks to combine behavioural and cognitive psychological theory with conventional economics and finance to provide explanations for why people make irrational financial decisions- also supports this hypothesis from research in risk perceptions, describing how people invariably overestimate the likelihood of an event with which they have some familiarity. In comparison,

One of the first activities with any process improvement programme is to understand the degree of concurrence, this usually confirming the prevailing inconsistencies. Interestingly, the risk

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Some of this variation can be explained through the seemingly high amount of discretion our well-intended risk practitioners are given when identifying, rating, and classifying risks and controls.

PRINCIPLES & PURPOSE

with an alien event, individuals will extrapolate from known situations to estimate unknown ones. Further studies have shown experts are often overconfident in estimating accurately from small data samples.

In an attempt to overcome these biases and variations introduced by human judgment, some corporations have flirted with a number of more scientific approaches, such as Bayesian theorem - which tells the probability you may experience an outcome (either wanted or unwanted), given some other event (directly or indirectly) has happened, in order to assess their risk exposure. However, these continue to receive mixed reviews due to the fact they become too academic and complex for the risk practitioners who manage these dynamic risks on a dayto-day basis.

Conducting a bowtie analysis is simple and intuitive

Nevertheless, in the words of the prominent management consultant Peter Drucker, “You can’t manage what you can’t measure”. Therefore, the profession is forced to explore other more practical options to provide predictive and severity qualities without requiring all operational risk practitioners to need actuary or statistical qualifications.

With limited viable alternatives, the risk community tends to default to our ol’ 5x5 matrix, where risks are tested against a scale to identify the degree of exposure (likelihood vs impact scoring), and as a consequence, potentially entertaining all the unwanted judgemental flaws mentioned above.

key risk(s) within a business value chain to conduct a form of a ‘premortem’ on the speculative event. This involves identifying and articulating the possible sequences of events leading to and/or the consequences resulting from the main event. Followed by answering the question of what can be reasonably done to prevent or minimise the impact.

As mentioned above, when rating risks, left to their own devices individuals may be quick to jump to their preconceived overestimated familiar perceptions in an attempt to minimise cognitive effort.

But how do you leverage the valued expertise to build a reasonable case for managing the risks without those unwanted biases?

One solution would be to extract all this tacit knowledge and replicate the mental image in an explicit, logical format. Then go one step further, illustrating this ‘pre-mortem’ thought process so other opinions can be made and taken into account.

The tool purpose-built for risk practitioners to manage and mitigate high risk situations is commonly referred to as the ‘Bowtie’ – originally created for the oil and gas industry during the 90’s but has all the qualities to be equally effective across multiple business segments.

If precision and consistency is important, we must question whether this variability is purely a result of the risk practitioner competencies or some other influencing factor.

With its roots buried deep within decision sciences- which takes in risk management, decision making under uncertainty, statistics and forecasting, operations research, negotiation analysis, and behavioural decision theory- a Bowtie analysis is designed to describe and investigate causal relationships within even the most complex high-risk environments.

The quality guru W. Edwards Deming argues 94% of the variation belongs to the system (process) and only 6% is unique to individuals. I believe this philosophy is also equally applicable in the knowledge management space.

Surprisingly, conducting a bowtie analysis is simple and intuitive - all required is some basic business background, good risk stakeholder representation and a confident facilitator to follow 15 logical steps:

Fundamentally, operational risk management sets about identifying the

1

The first activity is to identify the risk to be managed. This would

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B O W T I E A N A LY S I S M A X C A R D E W

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be similar to the evaluation made by a risk practitioner when assessing the business unit (BU) value chain in order to identify key risk(s). Typically, these would describe the first thing you would notice should the unwanted event materialise e.g. “Failure to report breach”.

Test the logic on the impact chains by retrospectively challenging the sequence with ‘because’ from the objectives being impacted back to the main event.

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Have the team identify the worst-case chain of events should this risk materialise.

Using the collective wisdom of the team, the risk can now be rated by referencing the most probable chain(s) of events against the likelihood scale of your 5x5. Similarly, the worst-case impact chain identified previously can be rated against the impact scale.

2

Engage with those BU leaders who would be impacted by this event and identify their high-level business objectives. These could be fairly general statements such as ‘grow wallet share’, and/or ‘grow customer wealth’, etc.

These steps have produced a comprehensive and documentable illustration of the risk’s inherent characteristics. The remainder are where the tool takes the risk management process into a new level even the most sophisticated computation fails to deliver.

3

Identify those stakeholders associated with the risk to represent their interests in the Bowtie workshop. These should range right across the BU value chain – especially ensuring representation from the BU that would/could be impacted.

4

Arrange the workspace of the Bowtie by firstly placing the risk of interest (the main event), in the middle of the workspace and arranging the BU objectives down the far right-hand side.

5

Begin the workshop on the lefthand side of the risk by employing the ‘5 Why’s’ root cause analysis.

These chains of events will fan out until the likely cause is outside their sphere of control, or it ‘just is’.

6

Test the logic of these causal chains by retrospectively challenging the sequence using ‘therefore’ from the root cause back to the main event.

7

Have the team reflect on all the causal chains of events and identify the most likely one(s) given what they know today.

8

Continue with the right side of the main event identifying the possible knock-on events (reverse fish-bone), until there is a direct line of sight to those BU objectives identified earlier.

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12

Identify the control regime available to manage/ mitigate this risk and map them according to where in the bowtie they operate (figure one).

The Bowtie approach has multiple advantages with respect to variation

13

Have the team rate how effective those controls are with reducing the likelihood or impact of event chains – especially those mapped to the ‘most-probable’ and ‘worst-case’ chains identified earlier.

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Leverage this new knowledge by re-rating the risk using your 5x5 matrix (residual risk rating).

Key controls can be clearly expressed as those providing the most support on those ‘mostprobable’ and ‘worst-case’ event chains

The Bowtie approach has multiple advantages with respect to variation.

Firstly, it removes the mystique of risk management by presenting all the characteristics of the risk in a logical order so even the totally uninitiated can appreciate the story and formulate their own opinions. Documentation of the event will also provide a valuable audit trail.

Secondly, these opinions can now be discussed in an open forum to gain a collective and therefore more consistent view of how to rate the risk under review.

This lessens the impact of unwanted biases being introduced into the decision process. There is strong empirical and theoretical evidence that the benefit of aggregating different forecasts for the single event, reduces the forecast error by about 15 to 20%.

Finally, the approach provides more confidence when reviewing the aggregated corporate risk and control regimes. The group based approach not only reflects

PRINCIPLES & PURPOSE

E

C C

E E

E

E

CNTRL A a truer representation of the individual risk, it is also provides a good gauge of the risk culture with ratings formed by collective rather than a collection of individual’s opinions. With so many benefits, why isn’t every financial institute employing a Bowtie analysis?

Bowtie analysis is not rocket science, as a matter fact, this qualitative tool is not scientific at all

Apart from the obvious naiveté challenge, there may be two other reasons why our Bowtie fails to be the hero tool in the practitioner’s repertoire. One stems from creating a bowtie workshop event and the other to do with conducting it.

Dealing with low probability events fosters a relative high degree of apathy resulting in low BU engagement to the processes of delivering risk management.

BU’s would prefer to stick with what they know best in creating value and outsource the administration component of risk to the risk experts – which includes this rating and categorisation process.

Furthermore, it is a hard sell for risk practitioners to request several business representatives to participate in a three-four hour workshop in order to improve standardisation and risk rating accuracy, especially when they believe they are already working well within their risk appetite.

With respect to the actual bowtie workshop, put a hardened risk practitioner out in front and the tenor of interaction changes immediately - people become courteous, compliant and cautious. A toxic cocktail to fire hose any collaborative working environment.

In summary, key risks within a corporation are finite and so are the limited resources available to manage them.

But ask any organisation that has recently experienced a major incident whether they wished they spent more time understanding their exposures and you will get the obvious response.

With respect to the quality of information they provide, a corporate-wide bowtie deployment programme is a relative inexpensive alternative to driving precision and consistency within risk management. The reluctance of BU active involvement is false economy when you

E E E

C C C C

I = Risk impacts

C

E = Risk event

C = Risk causes

Figure one: Example of the Bowtie format:

CNTRL B consider the amount of effort involved soliciting opinions, walking the risk through administration process and socialising/justifying the outcomes.

This is especially so when considered in conjunction with the misappropriation of resources resulting from any individual misjudgements.

The challenges of conducting a successful Bowtie analysis can be overcome by either providing basic workshop facilitation skills, or leveraging the resources within similar corporate strategic initiatives such as LSS. LSS practitioners not only have a good appreciation of the tools’ basic building blocks but the added advantage of impartiality - freeing the practitioner to actively articipate as the risk expert.

Bowtie analysis is not rocket science, as a matter of fact, this qualitative tool is not scientific at all. There would be no two bowties alike but the methodology ensures each risk story has considered content - minimising the variation and at least elevating the rating/categorisation process from an ‘art’ to a ‘craft’.

FURTHER READING: W. Edward Deming, Out of the Crisis.

Daniel Kahneman and Amos Tversky, Prospect Theory: An Analysis of Decision under Risk.

Nate Silver, The Signal and the Noise.

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CASE STUDY PANALPINA

KTPs: Generating innovation in lean programmes Mike Wilson and Andrew Lahy of Panalpina, together with Professor Aris Syntetos, who chairs operational research and management, and Nicole Ayiomamitou, a knowledge transfer associate, share how the company’s lean approach has benefited from a wave of innovative ideas stemming from a KTP (knowledge transfer partnership) with the University of Cardiff.

READ ABOUT: What is a KTP? How Panalpina used them to great effect How your organisation can get involved in this innovative scheme

I

n 2011 Panalpina, a logistics and freight forwarding company operating in more than 70 countries worldwide, hired Mike Wilson to launch a new logistics product to complement the company’s existing air and ocean services. Mike, with his background in manufacturing, was keen to put lean at the heart of the new logistics strategy but was also determined not to simply rehash the same top-down lean approaches many companies adopt.

As Mike explains, “We saw lots of companies blindly copying lean ideas from Toyota or Motorola without really understanding the underlying concepts of lean. We were determined to do something different – both in terms of our new logistics offering and in terms of developing a new approach to lean in our industry.”

Mike decided to go back to the fundamental principles of lean, and, before launching the new lean programme, insisted the management team read The Machine that Changed the World and come back to him with ideas.

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WHAT IS A KTP? A KTP is a knowledge transfer partnership, in which a company and a university identify a problem, and work together to develop innovative solutions that benefit the company and generate further research.

Typically, the business and the company jointly recruit an associate, who then works full time at the company but collaborates closely with and is employed by the university.

KTPs generally last between three months and two years and are funded by the UK government and by the company.

WIN – WIN – WIN – WIN:

The benefit for the company is it gets access to the latest research and the leading thinkers in the chosen field.

The benefit for the university is it has the opportunity to test and develop its research in a live environment and can demonstrate impact.

The benefit for the candidate is he or she gets to learn from the academic experts while at the same time applying the knowledge in the business.

Lastly, the UK government and the economy benefit, as KTPs often generate new business models that create employment and business growth.

More information on how to apply for a KTP and funding can be found at ktp.innovateuk.org

CASE STUDY

DEMAND DRIVEN INVENTORY DISPOSITIONING-D2 ID

D2ID is a sales and inventory forecasting approach Panalpina developed as part of its lean continuous improvement programme.

Nicole presented the new D2ID model to students at the university – providing the students with access to the latest business research

Now the company can help its customers improve sales forecast accuracy, calculate optimum service levels per SKU and identify excess inventory.

A LEAN DILEMMA

Going back to the original concepts of lean raised a lot of questions and left the logistics team with a dilemma: one of the key concepts of lean is to eliminate inventory and storage.

How could Panalpina offer a new logistics service providing customers with warehouse space (which is wasteful) while fully embracing the key principles of lean?

We saw companies blindly copying lean ideas from Toyota or Motorola without understanding the concepts of lean

Most companies face this kind of dilemma when they look at the key lean concepts – leading some to conclude lean won’t work for them. More typically, companies carry on with lean and ignore the parts that don’t suit them. Panalpina was determined not to do this – so instead of adapting lean to fit the business model, Mike adjusted the business model to fit lean principles.

Immediately this sent the team in a new direction. They had to find a logistics solution that didn’t rely on selling storage – one of the seven wastes in lean. “We had to do a lot of thinking, but eventually we came up with the idea of designing a solution to help customers increase flow, reduce inventory levels and shrink storage requirements,” Mike explains. This seemed counterintuitive at first, since most logistics companies like inventory – more inventory means fuller warehouses.

However, as Mike points out, 3PLs that focus on filling warehouses aren’t really helping their customers optimise their supply chains.

As the idea developed, the team began to look at ways to help customers reduce inventory and create flow in their supply chains. “We realised we had a wealth of information about our customers’ supply chains we were doing very little with,” Andrew Lahy says. “If we could use this data to help customers reduce inventory,

free up cash and improve service levels, we could truly embrace lean principles and offer an innovative logistics solution to the market.”

But because no one had ever considered the question of how a logistics company could help customers reduce inventory levels, Panalpina didn’t know where to begin.

TAPPING INTO RESEARCH AT CARDIFF UNIVERSITY TO SOLVE THE DILEMMA In the end it took a chance meeting between Mike and the academic team at Cardiff Business School, where Mike outlined the dilemma above.

Aris Syntetos, chair in operational research and operations management, recognised the business problem but also saw the potential for original research in the concept.

With the help of Pauline Found, senior lecturer at Cardiff Business School, the team decided to launch a twoyear knowledge transfer partnership

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CASE STUDY PANALPINA

(KTP) because of the complexity of the problem and its importance to Panalpina.

The KTP would develop a new inventory forecasting methodology, which the company called demand-driven inventory dispositioning (D2ID).

The new ideas and solutions developed have spawned a host of business improvement ideas and innovations within the company

To run the project, Panalpina and Cardiff jointly recruited Nicole Ayiomamitou, a mathematics graduate, who had also recently completed an Msc in operational research at the University Because no one had ever considered the of Edinburgh. “We question of how a logistics company could help deliberately decided not customers reduce inventory levels, Panalpina to hire someone with a logistics background,” didn’t know where to begin Andrew explains. “We wanted someone with a fresh approach to our business, and with Nicole’s exceptional knowledge within the company of how mathematical capabilities, we certainly to forecast and optimise inventory for found a candidate with a very different our customers.” perspective on the information we had available to us. I think if it weren’t for “Even more importantly, our lean team the KTP, we would never have thought can now help customers reduce waste to recruit someone with Nicole’s in a whole new area – and for most of skillset, and equally, if it wasn’t for the our customers, excess inventory and uniqueness of the KTP challenge, I don’t obsolescence are some of the biggest think Nicole would ever have thought of wastes in their supply chains. Now, we applying to a logistics company.” have a solution to help reduce them.”

SOLVING THE DILEMMA WITH D2ID

By working mainly at the Panalpina office but also spending time at Cardiff Business School, Nicole has developed a new solution for the company based on advanced inventory forecasting and planning. Panalpina now have a method and application they can provide to customers to assist in improving forecast accuracy, reducing inventory levels, and increasing service levels.

“We could have taken the easy option and bought some software off the shelf, but thanks to the KTP approach and a lot of hard work from Nicole, we have built the software ourselves,” Andrew says. “More importantly we’ve built the

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What’s more, the new ideas and solutions developed have spawned a host of new business improvement ideas and innovations within the company.

Panalpina are now looking to implement the application across multiple sites and help customers position inventory in the right channel, geography and supply chain phase, depending on the stage of the products’ lifecycle. “At the start, we had to help the company get up to speed with the latest thinking on inventory forecasting,” Aris Syntetos says. “Now the research Nicole is working on is pushing the boundaries of traditional forecasting methods, and from a research perspective, we are getting increasingly excited about where the ideas will lead.”

SPECIAL FEATURE CARE QUALITY COMMISSION

SPECIAL FEATURE

Sharing the caring The Care Quality Commission (CQC) is the independent regulator of health and social care in England. They inspect and regulate services to make sure they meet fundamental standards of quality and safety.

They inspect GP’s surgeries, care homes, hospitals, and work with community organisations, central and local government. Here, their ICT commercial manager Darren Spark discusses their lean practices.

READ ABOUT: How the complicated structure of this organisation has adopted lean Working in a sensitive area of healthcare and community support

: What does your job : What exactly is CQC and entail and how big is the what services does lean team at CQC? it offer?

CQC: Currently there is no dedicated CQC: CQC is the independent regulator of lean team at CQC. As the ICT commercial health and adult social care in England. We manager within CQC, holding a black belt certification, my regular job purpose is being responsible for the day Lean must align seamlessly to day management with CQC structures, culture and of the ICT budget and contract management of management performance ICT services and supply reporting systems for it to deliver long contracts. The role term results focuses on improving efficiency/cost/revenue and promoting lean principles. The key accountability being to ensure the make sure hospitals, care homes, dental IS and ICT contracts for service and and general practices and other care equipment provision that underpin the services in England provide people with Commission’s business programme are safe, effective and high-quality care, and delivered when and where it needs them we encourage them to improve. We work at an affordable price. in the following ways:

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SPECIAL FEATURE CARE QUALITY COMMISSION

Making sure services meet fundamental standards that people have a right to expect whenever they receive care.

Registering care services that meet our standards.

Monitoring, inspecting and regulating care services to make sure they continue to meet the standards.

Protecting the rights of vulnerable people, including those whose rights are restricted under the Mental Health Act. Listening to and acting on the public’s experiences.

Involving the public and people who receive care in our work and working in partnership with other organisations and local groups.

Challenging all providers, with the worst performers getting the most attention.

Making fair and authoritative judgements, supported by the best information and evidence.

Taking appropriate action if care services are failing to meet fundamental standards of quality and safety.

Carrying out in-depth investigations to look at care across the system.

Reporting on the quality of care services, publishing clear and comprehensive information, including performance ratings to help people choose care. : When did CQC first begin a lean implementation? And what were the reasons why?

CQC: CQC has yet to commence a full lean implementation, with myself being the only certified black belt within the organisation. I don’t believe there is defined reason why lean was first embraced by myself. In my experience, I read numerous case studies regarding 5S and wanted to embark on gaining knowledge in this area as the first stepping stone towards implementing lean and contributing to one of CQC’s values excellence.

My reasons for this were two fold; 5S can be a standalone implementation (with or without lean), and it will most likely show the most benefit for the largest part of CQC in the least amount of time. It can also be applied to all areas of CQC by helping to get things organised and keeping it that way. : What positives has it brought and what negatives and challenges has it turned up?

CQC: Making service processes more lean presents a variety of challenges. It often requires creative thinking but old habits die hard. For instance, when paperwork moves online, the steps of a process may still be performed in a sequential order, even though they could now be done in parallel. Rethinking old ways of working can lead to fresh insights. : What aspects of lean have been most beneficial to the organisation?

CQC: One of the primary beneficial aspect of applying lean within CQC has been in applying the “80-20” rule.

This being that a small percentage of work typically eats up a disproportionate amount of time. In one internalsupport function, 75% of the transactions took less than five minutes to process. But the remaining 25%, the more complex transactions, accounted for 60% of the total time expended every day.

Exceptions such as these had a huge drain on productivity and were typical for many service processes. Once the process work had been broken down into discrete pieces, those pieces were measured and set performance benchmarked. The benefit delivered was the business function manager was able to track the actual time spent on specific tasks, understand the drivers of productivity,

POKA YOKE, 5S AND VISUAL MANAGEMENT

PROBLEM:

SOLUTION:

It was difficult to locate ICT Supplier folders.

Sort folder in alphabetical order.

It was difficult to determine which folder was being used.

Colour code each shelf.

Apply a rising coloured line, so missing folders could easily be identified.

Create an index document.

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SPECIAL FEATURE

and fine tune their operations for far greater efficiency and cost savings. : What has the reaction from the staff been?

Has there been any resistance or misunderstandings to work through in terms of the workforce and what have been –if any- the recurring issues with engagement?

CQC: Despite initial scepticism, staff now realise many lean and six sigma tools are quite simple to understand and easy to apply. Furthermore, because they are rigorous, structured methodologies the causes, extent and location of problems are identified using facts and data. Guesswork under pressure is avoided in the search for solutions.

Austerity notwithstanding, the commission will be taking on 500 extra inspectors this year and spending £10m on training and development of its 2,000-plus staff

The recurring issues with engagement and misunderstandings have focused on understanding the principles of lean and six sigma. I would state lean is an essential element of the improvement journey. Many errors are created in non-value adding processes. Remove the process and you automatically get quality and delivery improvements.

Six sigma is about reduction of variation.

You would not want to waste time and effort on improving a process that is not required. Organisations should first lean their processes and then introduce six sigma tools on value added processes.

Together they produce a very rapid and effective framework for QCD improvement. : CQC is an independent regulator: has it suffered in austerity and has this been linked to lean implementation?

CQC: CQC continues to change the way it inspects at probably the most challenging time for health and care services in terms of demographics, public expectations and technology – and in a context where money continues to be as tight as it has even.

Austerity notwithstanding, the commission will be taking on 500 extra inspectors this year and spending £10m on training and development of its 2,000-plus staff, as well as “experts by experience” (users of services) and others from outside the

organisation who now join its expanded inspection teams.

Rather than suffering in austerity, lean implementation within CQC has encouraged staff to work collaboratively and to adopt a mind-set of being problem-solvers who can improve delivery, productivity and efficiency. This collaboration has enabled CQC to access the right expertise to solve problems whilst providing staff with the sense they are working in an environment that supports imaginative and innovative solutions. : Much of healthcare has been leaned, but mostly in hospitals and backroom departments, with such a hands on, disparate workforce often working with carers and in residences, does CQC have to take on unique adaptions of lean?

CQC: Lean is mostly maintained in office and not the frontline. The implementation of a lean thinking culture within CQC has been particularly relevant for three reasons:

1

Cost reduction: Being at the heart of a number of improvement programmes over the last few years, ranging from ‘Reducing CQC’s data network over capacity’ to ‘Improving CQC’s contract management Systems.

2

Service protection: Focusing on what does and does not add value for customers and improving efficiency and effectiveness. E.g. introducing new methods to improve financial forecasting and replace traditional manual processes.

3

Staff innovation: Empowering staff and increasing morale by encouraging collaboration between staff in the design or operational improvements. This in turn promoted a more innovation-friendly culture and environment.

: What are the plans for the future in terms of lean at CQC? CQC: Lean is not merely a business improvement tool. It is a philosophy which needs to be driven from the top team down if it is to generate required levels of understanding and belief. Securing such widespread commitment is challenging, taking valuable time and as a result many organisations end up launching their lean programme without due diligence as ‘just another quick fix initiative’ to address the same fundamental business performance problems. They rarely succeed.

The future plan in terms of lean at CQC will be for the business culture to back up statements of commitment lean with the right day-to-day behaviours and decisions or improvements are unlikely to be sustained. Lean must align seamlessly with CQC structures, culture and management performance reporting systems for it to deliver long term results.

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SECTOR FOCUS CIVIL SERVICE

Wales: the land of the lean Tony Mizen works for the Welsh Government as a head of continuous improvement and change at Academi Wales, and has a career in industry and government work.

He brings his knowledge to the lean implementations of public services in Wales.

LMJ interviewed him to see how you go about the mammoth task of leaning an entire country.

READ ABOUT: How the implementation of the devolved civil service took place Motivations and methodologies: is it business improvement or cost cutting?

The plans for how to improve services

: What’s your background?

Tony Mizen: I started my career working for Sony in the television manufacturing facility in Bridgend, on the production line. I worked my way up through quality, engineering and finally, procurement and supply chain management. I was involved with Japanese colleagues on new product development and product localisation with UK and western European suppliers.

I was at Sony for 13 years, then I moved on to work for what was then the Welsh Development Agency (WDA) and my role was going out working with local businesses, helping them up-skill and become more competitive

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focusing on their quality, cost, delivery and marketing processes to enable them to win contracts. We also set up a number of significant supplier development programmes centred around Welshbased OEM companies.

It was around this time I did my MBA with the Cardiff Business School Lean Enterprise Research Centre (LERC), and then moved on to become head of procurement within the WDA before heading up the Welsh Manufacturing Forum.

In 2009, shortly after WDA merged with the Welsh Assembly Government I took on my continuous improvement role. In addition, in 2012, I joined the Board of ICiPS (Institute for Continuous Improvement in the Public Sector) and in 2013 become a Fellow. I am also the chair of the All Wales Continuous Improvement Community. : How big is the team?

TM: I have three people working for me, including one seconded from NHS Wales In addition to their specific expertise they have a raft of experience and effectively channel their different personalities to great effect, constantly challenging and looking for new ways of doing things. : Tell me about the All Wales Continuous Improvement Community (AWCIC) TM: AWCIC is a democratic group run effectively by the public sector in Wales, for the public sector in Wales, to encourage and enable public and third sector organisations to exchange and share good practice amongst themselves.

To date we have over 400 continuous improvement (CI) practitioners signed

Academi Wales is part of the Welsh Government and our role is to build excellence in leadership practice across the Welsh public service at all levels of organisation

SECTOR FOCUS

We specialise in providing mentoring advice and support, delivering efficiency improvement workshops and delivering a range of training material

up representing 85 organisations. With a vision statement of ‘creating a critical mass of people who can transform the public sector in Wales’ the aims and objectives of AWCIC are to: Establish and promote a programme of best practice learning and sharing (including formal visits to experience best practice disciplines within public and private sector) to date organisations visited include Driver and Vehicle Licensing Agency, Intellectual Property Office, Royal Mint, Companies House, Schaeffler UK, Airbus, Rolls Royce, Swansea Coasting Housings, NHS, Neath Port Talbot County Council and Perkin Elmer. We focus on subjects such as visual management, problem solving, staff engagement, innovation and ideas generation.

Establish and promote agreed standards for CI training (ICiPS accredited).

Promote the achievements of AWCIC through events such as conferences and awards (Annual Standing National CI Conference).

Identify how we might use AWCIC to further develop thinking on difficult issues e.g. capturing and realising benefits. What and how should we measure?

Use AWCIC as a mechanism to forge closer links between policy making and practice and to identify opportunities to more rapidly scale up emerging notable practice. : In terms of the Welsh Government, what is the set up here? What is Academi Walesis it a government institution or an independent body?

TM: Academi Wales (AW) is part of the Welsh Government and our role is to build excellence in leadership practice across the Welsh public service at all levels of organisation through a programme of work that drives up standards of practice, develops skills, changes behaviour and improves knowledge.

In a nutshell, helping people grow through learning. Working across the board, not just with the devolved, but also the non-devolved (centralised) departments and third sector organisations based in Wales. The

individual but cross cutting strands of Academi Wales are public service schools and conferences, continuous improvement and change, research and development, personal development and growth, public service leadership and online and e-based.

I head up the continuous improvement and change team. We specialise in providing mentoring advice and support, delivering efficiency improvement workshops and delivering a range of training material, accredited through ICiPS, in fact, we’ve recently successfully undergone an annual assessment to retain our ICiPS badge.

Organisations we’ve worked with during the last year include local government bodies, police, fire and rescue service, and a wide range of other organisations, leading public service initiatives and who deliver services directly to the people of Wales. : Is there pressure on you doing lean as a cost cutting measure rather than an improvement and efficiency matter? Do they see you there to save pounds or do they fully appreciate the methodology?

TM: Certainly in the early days, when there was a combination of lack of awareness and preconceived views of lean. Particularly from people who come out of industry and with less positive experiences of lean based on a blinkered mind-set of trying to squeeze the last bit of work out of the employees.

Over the last six years we’ve gained a broad insight into public sector organisations and my feeling is most organisations have now gone through this phase and have been burnt from their experiences of catching people unaware – and are now seeing lean and CI as more of a friend rather an enemy. : Are these programmes now embedded in the government strategies of the future?

TM: I think it is probably safe to say this is the direction public sector in Wales will follow for the foreseeable future. It is encouraging to see evidence the levels of capability are increasing.

Going back six years or so when I first started in public sector lean work, it was enough at that time to go in and talk to organisations about some of the basic principles of lean; value verses waste, flow and identify quick and practical to connections to identify areas where efficiency can be made.

Now, many organisations we work with already have that basic awareness, where we add value is by mentoring and supplementing existing knowledge by providing a programme of training or facilitating a workshop designed to meet their requirements.

www.leanmj.com | July / August 2015

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FACTORY VISIT NEWSPRINTERS UK

Spreading the word LMJ editor Andrew Putwain visits Newsprinters UK, the Scottish printing presses recently awarded the Shingo Prize.

READ ABOUT: The company’s ethos that lead to win the world’s foremost business effectiveness prize The principles and ideas important to the firm That decidedly Scottish way of doing lean

N

ewspaper are a dying form of media. It’s a sad state of affairs, but the reality of our modern era. We love our internet too much; even the smallest publication has a website and we rarely look to the printed word as a first point of reference any more (remember phone books?).

is a modern and clean building of grandiose proportions and laboratoryesque cleanliness and regimen.

So it’s an odd idea for one of the world’s largest media empires to pump money into a revolutionary facility with the world’s largest printing press in this era of downsizing.

Donaldson joined in 2007 as the site was opening, after 20 years in Canada working at the largest printing presses in North America, for the Toronto Star, but chose to return to Scotland to take on the epic task of introducing continuous improvement to an industry entrenched in a mindset of ‘doing what they’ve always done’ and faced with the spectre of its own decline.

But that’s exactly what News International did in 2007. Opening their site’s new building, which then Scottish First Minister, Alex Salmond, called a ‘cathedral of print’.

Situated to the east of Glasgow, near the town of Motherwell, on a rapidly expanding business park, Newsprinters

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Group continuous change leader George Donaldson highlights the difference.

“Many printing presses in the past were dirty, greasy, dark places.” It was something they really wanted to avoid.

Senior operations manager Ross McCombe agrees; citing nepotism, traditional outlook and the lack of external views coming in as a reason

SPECIAL FEATURE

The epic task of introducing continuous improvement to an industry entrenched in a mindset of ‘doing what they’ve always done’

why the industry was suffering. “There was no knowledge of their waste and the potential they had in savings and improvements.”

Donaldson manages Newsprinters CI activities across its three UK sites; Motherwell is the smallest of the three, the others being Knowsley, near Liverpool, which covers the centre and north of England, and Broxbourne, outside London, which covers the south.

Broxbourne is five times the size of Motherwell, but can’t compete with it in terms of CI. “The sites all learn off one another and the three bounce back and forth ideas.

Things pass between the sites; an idea we had in Motherwell might go down to London, where they come up with a whole new angle for it, and come back up here in a whole new iteration.”

Around 110 employees work at the facility, mostly on a night shift starting at seven p.m. It’s the largest contract printer in the UK and prints many of the nation’s most famous newspapers: The Telegraph, The Daily Sport, Edinburgh Evening News and the Scottish editions of The Times and The Sun, as well a host of private contracted works of everything from regional newspaper to community leaflets and fliers.

But it’s the printing press itself that is truly impressive: the largest in the world (though not to be outdone, southern cousins at Broxbourne, have the largest print site in the world), that is capable of printing 86,000 copies of a 144 page newspaper in an hour; three stories high, and a truly epic amount of machinery.

“Asset care is the very important to us,” McCombe tells me, “Our kit can’t fail, we have no back up and with decreasing readership there’s no room for error.”

AN EXAMPLE OF CI IN ACTION

A simple and effective use of the change Newsprinters use was visible. Over 60 reels of newsprint are used every day at the facility. The person who would strip the huge reels of their cardboard outlay and then slice through it with a knife, after the machine had done the lion’s share – the reels weight two tonnes and need to be put on automated rollers to be moved – to use the reels.

In doing so, they were on average cutting through 15 layers of newsprint. Now, through a series of few simple changes, they cut through three. A waste of less than one kilogram (out of 2000). This tiny change in processes, has created a saving of tens of thousands of pounds a year.

This has enabled them to create leaders from within and CI co-ordinators who all equally share in improvement.

www.leanmj.com | July / August 2015

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FACTORY VISIT NEWSPRINTERS UK

The company has 12 quality processes, they refer to as their total productive manufacturing (TPM) system which includes all the usual parts of CI, as well as modern elements like a passion for environmentalism.

McCombe (L) and Donaldson (second from left) collect their award in Utah.

THE SHINGO PRIZE

Donaldson and McCombe are pleased with their win, but were taken aback when it happened. “We had hoped for at least silver.” When the news came Donaldson was alone in a hotel room on a work trip, with no one to celebrate with. Though the staff had a glass of champagne later on his return.

They became interested in the prize whilst visiting Ultraframe Conservatories, and after analysing the criteria saw they could be in with a chance.

They compiled a thorough case which they presented last year.

The Shingo model is based on four dimensions: Cultural enablers (10 principles each) Continuous process improvement Enterprise alignment Results It was Newsprinters respect for their staff and their humility that helped them. The Shingo adjudicators who spent two days at the site to inspect every inch of it were suitably impressed. “They told us they’d love to work here.” It’s not hard to see why.

One of those rooms for errors is web breaks. The complicated art of changing printing paper and products. “We like analogies here,” Donaldson explains, “like formula one race teams have pit stops we have line breaks for changing what we’re printing. We need a quick change over for all our different newspapers and it’s a race every night.

We do as much pre work as possible. If we don’t get our product there in time, there’s no way of making it up. The trucks leave without our product.” There’s no second chance. With this it’s easy to see as why SMED is one of the main ideas they’ve taken to heart.

Donaldson continues as we tour the facility: “It’s not just about removing waste but a holistic approach to the business.” There are no other CI team members, instead George has undertaken training every single member of staff in improvement. It is has been deployed across the group to create disciples.

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The plan, when CI was brought in on the construction of this new facility, was on a three pronged attack: 1) organisation, 2) standardisation, 3) engagement. The third is the hardest according to McCombe, who himself had no background in CI, and explained the reaction from the staff at the time was less than enthusiastic- to put it mildly. The reaction used the Scottish natural ability with swearing, and as McCombe and Donaldson reminisce over their uphill battle, it was clear it was not always a pleasant task.

“Printing was a historically well paid profession, so we had a lot of lifers, who’d only ever had one job,” McCombe tells us, “People whose father’s had worked in printing, and who had always been in the industry. We had a lot of people saying ‘it won’t last’”. Donaldson laughs now, but it’s obvious it was a little more controversial at the time, “The essence of what we do is mindset. 80% of improvement and change plans fail and that failure is due to a reliance on the toolkit. We relied on an alignment of thinking.”

Bringing the whole team on board was a long hard task but they have achieved it. “Common sense is not always a common practice.” Donaldson states.

“Individuals are accountable; punishment as a team does not work.”

“Now everybody knows our vision of CI. Everybody knows how they’ve contributed to it and how they’ve done so to the business.”

Donaldson is also less than keen on the terminology. Why would someone in Scotland be speaking Japanese? “We never call it the gemba.”

He’s less than impressed with hearing about going to the gemba as an important part of a lean transformation. “We go to the gemba every day.

Except we call it the workshop.”

“Lean is a bit like the diet industry.” He explains: Diet lean, lean lite, fat free lean. A lot of misleading words and people cashing in on a confusing set of terminology that needn’t be used.

The techniques Newsprinters have used over the years to get their results take on a bit of everything. Emphasis is on the staff themselves which has led to just a 1% turnover. Impressive for a firm where 60% are employed by business partners working within the space.

But that emphasis remains: learning and development are key and there is heavy investment for staff with NVQ (national vocational qualifications), workshops and importance placed on respect and humility.

SPECIAL FEATURE ??????????

BOOK REVIEW

BOOK REVIEW

Joe Bell launches the first of his regular book reviews. As SVP of people operations at Google, Laszlo Bock’s book outlines how we should transform the workplace through the way we work and lead.

G

oogle. As a brand, Google has a personality. To many it is unique, progressive and cool. To others it is a corporate mammoth allegedly entangled in European tax-avoidance.

Whatever our perception of Google, it is not dull (as compared to, say, Microsoft).

So what is it that makes Google a ‘talent powerhouse’? In Work Rules! Laszlo Bock provides an insight from behind the wizard’s curtain and shares some of the people practices in Google today.

The recommendations must be understood in the broader context to be considered meaningful e.g. what can a small company learn from this?

Thematically, Bock’s book is one of freedom, meaning and empowerment for employees. Creating an environment to enable this is the function of the people operations department and Work Rules! outlines lessons learnt and the result of this approach. Of course the application of his ideas within Google may seem fanciful in a more challenging

environment but many assertions remain valid.

I felt like Sylvester Stallone in 80’s classic Demolition Man: arriving in a place where human emotions such as jealousy and resentment are things of the past and everyone peacefully co-exists

The most insightful points are around the role of managers. At one point Google removed managers. This was in line with enabling freedom and allowing all Googlers to self-regulate without any form of hierarchy. The experiment failed and managers were reinstated a month later. I admire the bravery – to experiment and take action when required – and that Google learnt from this. Managers became accountable to their teams and are measured against both the execution of objectives and their team’s perception. This has worked for them and made the best of an uneasy alliance. This is reminiscent of the principle of servant-leadership where the leader shares power, puts the needs of others first, and helps people develop and perform.

Giving work meaning by being transparent in all you do (including

www.leanmj.com | July / August 2015

33

BOOK REVIEW WORK RULES

recording meetings for employees to watch) and dealing with the rapid culture-change Google’s growth created are also interesting points. Despite little in Work Rules! being transformative or new, Google is clearly responsive to its employees and they have a valued voice and an input. This has led to innovation and the space for great minds to breathe and go beyond what they think is possible. Overall, Work Rules! advocates a culture of trust, freedom, high rates of pay and a fantastic working environment as key to its success.

assertions lack research – relying on a single reference point which can be clawing. His language also masks traditional HR practices at work: when faced with an underperformer, Bock insist they should be shown “compassionate pragmatism” (what?) and there is often a refusal to acknowledge human nature is not entirely perfect. Interestingly, Google attempts to direct employee behaviour through ‘nudging’ (peer pressure) as opposed to directly addressing it. This raises interesting questions on group culture and manipulation.

Work Rules! is a twist on current people practices that are up-scaled to the Google environment. Involve/trust employees, take action on employee surveys, remain committed to the goodness within people, and so on.

This is not radical or transformative, but does sound slightly sweeter when done in such a gold-plated fashion Google’s endless resources allow.

It is clear Google keenly wishes to retain its founding principles of creativity and non-conformity (even employing a chief culture officer). Yet whilst reading Work Rules! at times I felt like Sylvester Stallone in 80’s classic Demolition Man: arriving in a place where human emotions such as jealousy and resentment are things of the past and everyone peacefully co-exists. Mind you, if I had Barack Obama and David Beckham popping in to give lunchtime

Bock’s writing is relentlessly upbeat and positive. Critically, many of Bock’s

talks in the ever-abundant and free staff canteen I might also believe the whole world could operate just like this.

WHAT I LIKED

Bock is passionate about people’s goodness Google seeks to learn from its mistakes An insight into Google

WHAT I DIDN’T Idealistic and impractical at times Brain-smashingly upbeat No meaningful surprises.

DO YOU KNOW SOMEONE INSPIRATIONAL IN MANUFACTURING? Nominate them in 200 words or less here:

themanufacturer.com/TOP100 or Email: top100@hennikgroup.com

ENTRY DEADLINE: 31 JULY 2015 For further information contact v.fitzgerald@hennikgroup.com

Top100 half page LMJ july 2015.indd 2

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Tweet about who inspires you #TMTOP100

08/06/2015 11:12

L E A N O N L I N E J U LY / A U G U S T 2 0 1 5

LEAN ONLINE

LEAN NLINE

ROUNDING UP THE MONTH’S DIGITAL COMMUNICATIONS ON LEAN The LMJ website has great blogs and other lean coverage in bite size chunks for you to enjoy.

Get involved and join the discussion.

Remember to visit our LinkedIn pages and follow us at @LeanMJournal and editor @AndrewPutwain on Twitter.

Andy Marsh, managing director of Suiko, explores the difference between being lean and achieving excellence.

Businesses that have survived the recent economic pressures have no doubt been forced to improve and embrace a leaner mind set. In our experience, this has inevitably focused on cost reduction. Many organisations will have embarked on improvement programmes that have reshaped the ways of working and also developed in house improvement capabilities. They will have understood the relationship between the sustainability of their results and their ways of working (the practices).

And for the vast majority of businesses that tick these boxes, the focus remains on the primary physical processes where value is added and the waste is most visible.

However, with the economic climate now looking much rosier, many organisations are starting to fall into the trap of thinking they are lean because they have lean expertise and a dedicated resource. There is much to be said for kick starting the process; however we consider this one of the earlier steps of the operational excellence journey. There is still a long way to go.

Brazil’s richest man is obsessed with lean Ian Machan explores how the Heinz-Kraft merger could affect the perception of lean with the owner’s skewed views on the methodology.

This quote comes from a recent BBC article “Brazil’s burger king likes his companies lean”. It reports Jorge Paulo Lemann, a former Wimbledon tennis player, who has invested along with Warren Buffet into Heinz, Burger King and Kraft through his company 3G Capital, takes cost cutting very seriously.

They quote a range of such measures including removing personal office space, limiting Blackberry usage and fewer company jets.

Should we, in the lean profession, be disappointed by this use of the word lean? After all it doesn’t refer to a waste reduction process or continuous improvement, but does refer to massive job reductions. Isn’t this what concerns people when they hear of a lean implementation coming to their place of work?

On the flipside, isn’t there a problem if lean practices can’t transform a business carrying costs that are not adding to the value delivered to a customer, and requires thousands of excess people to run an efficient, balanced company?

The first principle of lean is to create customer value in order to achieve a competitive advantage. Organisations that achieve a level of stability in the primary processes will generate far greater business benefits in terms of cost, profit and cash in the long run, through the development of wider business thinking or end-to-end thinking.

Is it a choice between being nice or nasty? Does lean belong at the high table of mergers and acquisitions or is it forever destined to be used just as an operational improvement tool? Can corporate cost cutting learn from lean or vice versa?

See more at: http://bit.ly/1Pl6IwE

See more at: http://bit.ly/1MBXRl9

www.leanmj.com | July / August 2015

35

OUT OF THE BLUE BILL BELLOWS

Out of the blue: Utopia: Next step or last stop?

S

ir Thomas More was not the first person, nor the last, to disagree with King Henry VIII. His last serious conflict, refusing to attend the coronation of Anne Boleyn as the Queen of England in 1533, was interpreted as a snub against Anne. From this episode, More’s enemies organised efforts to arrest him on charges of treason, ending two years later with his beheading. A tragic ending for the MP and author; who, nineteen years earlier, described the fictional island republic of Utopia. Common explanations suggest this landmass in the Atlantic Ocean represented a perfected society, one ultimately unreachable. 500 years later, visions of Utopia live on in our imaginations. But, what can be said of the enduring concept of perfection?

I have often entered a DIY shop in search of a specific tool or piece of hardware, not knowing where to find it and sought out assistance from a staff member.

With their guidance through the aisles, the interaction inevitably ends with the question, “Is this what you are

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What can be said of the enduring concept of perfection?

These articles present concepts to the LMJ community which might appear to be “out of the clear blue sky,” yet could be valuable to lean practitioners.

This issue we tackle that tricky concept of Perfection. looking for?” and my reply, “Perfect!”

In other words, “exactly what I had in mind.” Such an explanation of perfect differs fundamentally from a definition of perfect as an unreachable endpoint.

That is, in terms of a product or a service, there will never be a better one.

While I acknowledge my use of “perfect” to respond to questions such as “Is this what you are looking for?,” I have serious doubts about the use of perfect in the context of an ultimate achievement, perhaps characterised by “The Pursuit of Perfection,” a phrase often attributed to Toyota’s Lexus division.

As with Utopia, the concept of perfection as a pinnacle of performance is hardly limited to Toyota. Dudley Moore came to fame in the United

OUT OF THE BLUE

To perceive improvement as continuous requires thinking past stops that offer the illusion of barriers to improvement

States in the 1970s with the film 10, a romcom in which he was paired with American actress Bo Derek, the perfect woman, a “10” on a scale of 1 to 10, if not 0 to 10. What matters is this scale, with a parallel to an Olympic judging system of 1 to 10, ends with 10 as the highest possible achievement in beauty as well as athleticism. What are the implications of a measurement scale that terminates abruptly? What can be said of the continuous pursuit of perfection, if perfection represents an endpoint, such as Bo Derek?

While exploring a generation before models Gisele Bündchen and Naomi Campbell graced the covers of Vogue magazine, would it be possible for Dudley Moore’s character to find someone more beautiful than a 10? Can an organisation practice continuous improvement and simultaneously believe in perfection in this context? Does CI stop at perfection? On several occasions, I have heard the logic “continuous improvement is a journey” and “perfection is a very distant goal,” well in keeping with Thomas More’s Utopia. A distant goal, agreed, but also a point of stoppage that conflicts with my understanding of continuous, quite often defined as “happening or continuing without break or interruption.”

all the while in pursuit of a quality goal of zero defects and a lean objective of zero waste, seen together as the achievement of perfection. As I commented in the October 2012 edition of the LMJ, leaders of lean initiatives should be mindful of the thinking behind lean and ask themselves questions such as;

In a similar manner, I am reminded of the time I was once interviewed by a recruitment agency to offer a recommendation for a colleague. Each question, I was asked to rate my colleague on a scale of 1 to 10, with 10 being the highest. With replies ranging from 6 to 9, I reminded the interviewer that my answer, whether 6, 7, 8, or 9, was associated with a scale of 1 to 10, in which an 11 does not exist. It goes without saying 10.001 is also an impossible achievement. At one point I was asked by the interviewer if I was a philosopher, perhaps an indication my attempt at clarification was needlessly theoretical. I offered I was a student of the philosophy of continuous improvement and was puzzled by a scale that did not allow the performance of a system, a product, a process, if not a person, to continue to improve, whether that meant an ever higher output, such as kilometres per litre for fuel economy, an ever lower output, such as lowering the parts per million levels of nitrous oxide in an automobile exhaust, or moving closer and closer to a finite value, such as the European Space Agency’s Philae probe ability to arrive on target on the distant comet, Agilkia.

How much time and energy is invested in an organisation in pursuit of activities that are deemed to be well? In a manufacturing environment, this question often translates to “How much time is spent every day in organisations discussing parts which are good and arrive on time?” For programme managers, “How much time is spent reviewing project tasks which are going well?”

Visiting Israel recently, I joined a group of international manufacturing executives for a tour of ISCAR, a global supplier of machine tools with a reputation for advancing metalworking. Above the entrance was a symbol of their thinking, a sign that read “Where Innovation Never Stops.”

Under the banner of lean six sigma, organisations have maintained a steadfast commitment for the elimination variation and non-value added activities,

Who is best positioned to judge an effort as adding value or contributing waste? Does the conclusion “non-value added” imply a “net present value” calculation for a closed system?

That is, who possesses the foresight to accumulate the entire “value added” by an effort, seeking a summation that extends into the future and across an open system that extends beyond reach?

Might it be possible that seemingly Utopian end points, such as the achievement of zero defects, zero waste, and the elimination of non-value efforts, stem from how individuals and organisations currently think about their efforts, without realising the conflict between a focus on continuous improvement and the existence of perfection, even if a distant goal? To perceive improvement as continuous requires thinking past stops that offer the illusion of barriers to improvement, much as Sir Roger Bannister raced past a four-minute mile and Chuck Yeager flew a fighter plane beyond the sound barrier. Would continuous improvement be a focus of exploration in Utopia?

www.leanmj.com | July / August 2015

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E V E N T S There is currently an expanding pool of events available for the development of the lean community.

They offer both general and sector specific opportunities to renew your enthusiasm and gain new perspectives through communicating with lean contemporaries.

UPCOMING LEAN EVENTS INCLUDE:

EUROPEAN LEAN EDUCATOR CONFERENCE 2015 September 16-18, 2015, Stockholm, Sweden

The European Lean Educator Conference 2015 provides a platform for trainers, coaches, professors and teachers from industry, academia and government organisations to share their knowledge and experiences and learn from one another.

The European Lean Educator Conference is dedicated to fostering exchange within academia as well as between education and industry.

All participants will take home practical lessons-learned from one another. After many successful Lean Educator Conferences in the United States, the European conference is now in its second year and will this time take place in Södertalje, close to Stockholm.

Keynote speakers, coaches and lean implementers of leading organisations and companies will share their experience and knowledge.

Through innovative educational approaches – ranging from simulations, case studies, learning factories and new training methods – participants will receive new ideas for teaching, practicing and coaching continuous improvement.

For more information please visit: bit.ly/1DAJuqs

38

5TH EUROPEAN LEAN IT SUMMIT October 7-9, 2015, Paris, France

Confirmed Speakers for this year are: Dan Jones, Steve Bell, Mike Orzen and Michael Ballé.

This year’s theme is “Lean: an obvious choice for your digital transformation”.

The ingredients of a successful digital transformation are: 1) simplified customer experience 2) faster value streams 3) end-to-end collaboration, and

4) innovation through fast experimentation.

Lean IT is devoted to improving customer satisfaction, time-tomarket of products and services, teamwork and innovation. Lean hence becomes an obvious strategic choice for making your digital transformation a real success.

For more information please visit: www.lean-it-summit.com

THE AME 2015 INTERNATIONAL CONFERENCE October 19-23, 2015, Cincinnati, Ohio, USA The AME Conference is the largest lean conference in the world. Fifty-four presentations, 40+ tours, 18 specialinterest sessions and 40+ workshops provide you with a transformational learning experience like no other.

Learning from the insights of worldclass, highly successful practitioners who have been there and done that, you are provided with a trusted source of knowledge you can rely on to confidently

make the changes needed to accelerate growth. The leaner processes are and the more engaged people are, the more productive you become and the greater your bottom-line success will be.

Speakers include Libby Gill, Jeremy Bout, Dick Rutan, Lisa Bodell, Steven Spear, Nick Bontis and John Ratzenberger.

For more information please visit: www.ame.org/cincinnati

THE LEAN STARTUP CONFERENCE November 16-19, 2015, San Francisco, California, USA The Lean Startup Conference helps entrepreneurs learn from each other.

Brimming with founder stories you’ve never heard, fresh case studies, and indepth expert advice you can use the day you get home, the conference delivers advanced lessons in entrepreneurship.

This year’s event has key sessions for corporate entrepreneurs, non-profit leaders, educators, government staff, and growing startups—and it includes a slew of ways to meet other attendees relevant to you.

For more information please visit: http://2015.leanstartup.co/

Photo courtesy of Sebastiaan ter Burg on flickr

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