LMJ Issue 4

Staying Lean Professor Peter Hines

Cansocietygetlean?

Reviewing the efforts of our public services to adopt lean culture and become more effective in answering the needs of the most demanding customer – society.

Dr Keivan Zokaei reports on LERC research into lean in public services The Ministry of Justice gives readers insight into their lean programmes Brenton Harder and Andrew Spanyi explore the potential of lean in their service environments Dominic Mohony and Chris Rodgers investigate the impact of informal behaviours on official change initiatives Part two of BAE Systems’ lean submarine campaign

The Lean Management Journal is supported by the Lean Enterprise Research Centre, Cardiff Business School

And much more...

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Issue 04 May/June 2010 www.leanmj.com

In this issue:

Dear reader, In times of upheaval it is more important than ever to be sure where your organisation is going. What holds your company together? What motivates your targets, your workforce, your whole strategy?

These are exciting but turbulent times for UK readers who have struggled to maintain business as usual against the back drop of a general election campaign, unprecedented in the way it invaded into the public mind through a range of social media and are now attempting to cope with the added confusion of a hung parliament. Further afield we can only wonder how companies in Greece are building the recent turmoil of strikes and economic catastrophe into their business continuity and strategic contingency plans and how they are managing workforce expectations.

External forces like the economy, politics and natural disasters will always be a concern for organisations seeking continuity. However, this concern is only amplified when we turn to consider public sector organisations whose very structure, budget and success measurements rely to a large extent on government whim. In the current financial climate the inevitability of spending cuts to public services, uttered in the same breath as expectations for service improvement, present a unique challenge which can only be tackled through clear end-to-end understanding of work flow, system purpose and through a collaborative approach across government departments. These imperatives and the work that has already been done in public sector are explained in this issue by some fascinating contributions from the Cabinet Office, the Ministry of Justice and the Lean Enterprise Research Centre.

So much for organisational structure and work flow – the technical key stones to success.

What about the messier side of change? We all know that the best laid plans and strategies can go dramatically awry for no clearly definable reason. In this issue Dominic Mahoney delves into the impact that informal conversations and behaviour patterns in the work place, and beyond, can have on an organisations’ success in achieving organisational change. Personal, social and political issues (plus more) will affect how employees in your organisation react to improvement initiatives and the terminology used to define them.

How can managers and executives handle this dynamic and get to understand it?

These are pressing questions for any organisation today and I hope that in this fourth issue of LMJ some answers will be given, some problems halved and some further questions raised that will help you and your organisation move forward with a greater understanding of roles, purpose, targets and more.

All best,

Editorial

Commissioning Editor – Jane Gray j.gray@sayonemedia.com

Design

Art Editor – Martin Mitchell m.mitchell@sayonemedia.com

Lead Designer – Alex Cole

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studio@sayonemedia.com

Jane Gray Commissioning Editor Email: j.gray@sayonemedia.com Tel: 0207 202 4890

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Neither the Lean Management Journal or SayOne Media can accept responsibilty for omissions or errors.

Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

ma y / ju n e

Introducing the editors

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Lean News

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New for this issue. Some insight into activity, success and change in the lean community.

Public Sector Improvement

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Justifying lean

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22

25

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Making the case for the use of lean principles in Ministry of Justice change initiatives. A review of the literature to date and a foray into early wins.

Dealing with the messy side of change. Dominic Mahony and Chris Rodgers explore how to tackle informal culture and behaviour patterns making clear the influence they can have on the success of your transformation plans.

Submarine lean: Into Construction

Part two of the story begun in Issue 03. This article shows how BAE Systems took their lean wins in the manufacturing function into the construction phase.

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Organisational Evolution

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Book Review

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Events

Lean at your service

Brenton Harder of Credit Suisse and Canadian author Andrew Spanyi collaborate to bring the potential of lean in the service sector into focus. Highlighting the pitfalls and dangers as well as well the benefits to be reaped.

A systems journey to lean housing services

Used in the research explored earlier in the issue by Dr Keivan Zokaei this case study tracks the journey of Portsmouth’s housing authority towards and lean and efficient service.

Dr Keivan Zokaei reports on LERCs recent investigation of the use of lean and systems thinking in public services.

In charge but not in control

Collaboration for CI - a public sector story

Tristan Chapman explains the increasing role of collaboration in extending and embedding continuous improvement across the public sector.

Dr Keivan Zokaei opens with some scene setting thoughts on Lean in services and public sector.

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Case studies and implementation

Re-connect with the work

Principles and purpose

c o n t e n t s

Mike Rother provides an inspiring glimpse into his philosophy on training for creativity and flexibility.

John Bicheno reviews Toyota Kata by Mike Rother.

A selection of key dates for your calendar

Britannia House, 45-53 Prince of Wales Road, Norwich, NR1 1BL T +44 (0)1603 671300 F + 44 (0)1603 618758 www.sayonemedia.com.

Lean management journal: ISSN 2040-493X. Copyright Š SayOne Media 2009.

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Introducing your editors Articles for LMJ are reviewed and audited by our experienced editorial board. To add value and enhance learning for readers the board also contribute editorial comment against articles. These comments draw out the salient points and suggest directions for further investigation.

Jacob Austad

LeanTeam, Denmark

Brenton Harder

Credit Suisse

Stuart Barnes

Warwick Manufacturing Group, University of Warwick

Professor Peter Hines SA Partners

Bill Bellows

Ebly Sanchez

John Bicheno

Wendy Wilson

Norman Bodek

Dr Keivan Zokaei

Pratt & Whitney Rocketdyne

Lean Enterprise Research Centre, Cardiff University

PCS Inc.

Volvo Group

Warwick Manufacturing Group, University of Warwick

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Lean Enterprise Research Centre, Cardiff University

More information on our editorial board, their experience, and views on lean is available on the LMJ website: www.leanmj.com 4

ew A n ion it ! add r LMJ u o to y With thought leadership advancing apace and lean philosophies taking shape in ever more organisations it seems only right that achievements, wins and appointments ought to be communicated to the community at large.

With this in mind we have made the addition of a lean news page to the journal. News will also be available soon on our webpage www.leanmj.com

Chairman of Lean Enterprise Research Centre (LERC) steps down This month Peter Hines, LMJ board member and Chairman of Cardiff University’s LERC has announced that he is leaving the organisation

to concentrate on the work of his successful consultancy SA Partners and to give more time to his work with academia in Australia and Ireland.

Bosch Rexroth launch lean factory conglomerate Bosch, international appliance manufacturer and supplier of technology, have launched a UK version of their Lean Factory Group (LFG). The LFG initiative already exists in Germany, USA, Comprising seven partners the group aim to work together to align their lean offerings and capability – enhancing

value for their customers and markets.

The group are currently undertaking a road show in which they offer to share their experiences and insight into lean production, operations and culture. To find out more about the group visit www.lean-factory.co.uk LFG seminars are free to attend.

Success for DHL and Shepherd Neame

Ben Wright, business improvement and supply chain manager for Shepherd Neame says “Winning an IQPC for this project, which was a first step in a programme introducing lean sigma thinking and methods into the supply chain, has been a real encouragement to the team. It has given renewed focus

to our efforts to build a first class production and logistics capability at Shepherd Neame.”

DHL’s Holger Winklbauer, executive vice president Corporate First Choice, gave further meaning to their achievement by clarifying that “this award shows that we are a learning organisation; one that strives to improve itself continuously for the benefit of our customers, for our employees and for our investors.”

Meet many of the award winners from IQPCs Process Excellence Award at their Lean Leaders Summit in July – more details on the Events page (p 35).

Later in the year Shepherd Neame and other IQPC winners will be helping LMJ with a feature on how to celebrate success meaningfully.

If you have any news that you think would interest and benefit the lean community please let us know. Send submissions to the commissioning editor Jane Gray: j.gray@sayonemedia.com

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Celebrating the work of ambitious and successful lean projects across sectors the IQPC 11th Annual Process Improvement Awards were held in London on Tuesday April 27. Major recognition went to DHL for the Best Process Improvement Programme while an innovative award for the Best Process Improvement Project Under 90 Days was taken by Shepherd Neame, the oldest brewers in the UK but a company who have recently pumped new verve into their culture to keep pace with modern customer needs.

Dr Keivan Zokaei, Lean Enterprise Research Centre, Cardiff University

Re-connect with the work Dr Keivan Zokaei opens with some scene setting thoughts on lean in services and public sector.

There are no ideologies in management.

In fact, as Deming said, man invented the existing management philosophies and man should rethink them depending on the problems at hand. Lean thinking has done a lot to highlight some of the fundamental flaws in conventional management thinking but it is now critical that the lean community does not lose perspective and become an inwardly focused clique, applying the methods of yesterday to the problems of today. This imperative is even greater when facing new challenges in new environments such as the public sector.

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The public sector is in deep trouble, not because of impending spending cuts but due to an ingrained culture of hands-off management. This culture, reinforced by the assumptions of conventional management, has led to the proliferation of irrelevant targets and systems which lack any pertinence to the actual work. To make matters worse the demand from hands-off management for tried and tested business improvement techniques to solve issues in these times of crisis is allowing lean thinking to be applied in an off-the-cuff manner, without real understanding.

It is difficult for lean thinkers to explain to hands-off managers that they must radically change their thinking before improvement with real meaning or hope of sustainability can be made. Since this is often overlooked it is unsurprising that many lean projects in the public sector fail to address the end-to-end of the entire system but instead focus on point or pointto-process level. With this backdrop and the additional consideration of Toyota’s recent difficulties there is a severe risk that the reputation of lean will be permanently tarnished for public sector and fade away as simply one more management fad. However painful it may sound, public sector must fundamentally rethink the conventional

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management assumptions which have allowed it to become infested with targets that do not lead to better performance.

Let’s visit the example of GP practices in primary care in the NHS. GPs are regulated and rewarded through the Quality and Outcome Framework (QOF), the higher the score in the QOF, the higher the financial reward for the practice. The framework aims to help practices benchmark and improve the delivery and quality of care for patients but is flawed in the way it functions; using hundreds of indicators, nearly all of which measure activity within a practice. Such indicators drive GP behaviour to focus on referring people for tests and on data management. Similarly, the framework encourages practices to provide appointments within 48 hours and in adherence to a set pattern. This results in a standard allocation of 10 minute slots (sometimes shorter) to each patient. This maximises apparent activity but completely ignores the actual purpose of the system which is treating the patient. The 10 minute slots are frequently insufficient for appropriate treatment and this leads to repeat visits. A study of demand in one English practice found that patients were visited between 1 and 16 times for the same or a closely related condition.

This clearly shows high levels of failure demand (demand arising as a result of the system doing something wrong or failing to do something right). Ironically a practice can receive high financial rewards by focusing on good record keeping, by having many patients on the register and turning around appointments as quickly as possible regardless of the actual outcomes for the recipients of the service. The QOF essentially means that practices are being incentivised to do the wrong things righter.

Something to mull over as you read the rest of the issue...

P ubl i c S e c to r Impr ov e m e n t K e i va n Z o ka e i

Dr Keivan Zokaei examines the role of lean and systems thinking and their future potential in the public realm.

A report on recent research findings.

Public Sector Improvement P

ublic sector spending and plans to deliver savings through more efficient operations were at the heart of pre-election debate in the UK. While there is no argument over the fact that public sector budgets will be slashed, there are very few specifics available. Recently the Wales Audit Office, the public spending watchdog in Wales, published an important report with startling predictions for the gap to be bridged by Welsh public services in the near future. The report predicts that, over three years from April 2011, there could be a total cut in funding for Welsh public services of around £1.5bn. In addition to these spending cuts public services are also likely to see increased demand due to rising unemployment and an aging population. The public sector across the UK is facing its biggest challenge for at least a generation and will have to work in radically different ways if it is to sustain current service levels, let alone improve.

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P rinciples and

LERC’s work so far has looked at three pioneering public sector organisations – Neath Port Talbot County Borough Council, Blaenau Gwent County Borough Council, and Portsmouth City Council. All three cases have delivered substantial bottom-line savings through the use of lean and systems thinking, though ironically none of these organisations began their work by focusing on cost saving, all seeking rather to improve services for citizens. It is often lost on the senior managers in the public sector that

purpose

The Wales Audit Office has commissioned the Lean Enterprise Research Centre (LERC) to undertake an evaluation of the potential of lean and systems thinking for public services. The evaluation is well underway and the preliminary report and case studies have received considerable attention from practitioners and the media.

(This report is available at www.wao.gov.uk )

focusing on cost and target efficiency rather than effectiveness often increases costs as well as worsening services.

The featured case studies all followed the same systems thinking methodology originally developed by Professor John Seddon and this methodology gave a framework for understanding the true nature of their current performance and problems.

Across all the participating organisations there was no toolkit applied to managers’ problems and no training course for managers to attend. Instead, participants were required to continue to follow the method and ensure that they were engaged in the study of their service in a systematic way. Workers themselves were responsible for the redesign of the system in which they worked – a powerful way of engaging the workers in improving the service.

In each case, the current measures and targets were raised as a system condition after going through the ‘Check’ process and all found examples of the unintended consequences of managing by targets, which led to poorer services in the form of longer end-to-end waiting times and unnecessary work for the local authorities. By redesigning their systems, the authorities realised that the boundaries of their systems stretched further than the domain in which their service had control. Each case study had examples where other agencies had received benefits from their redesign improvements. Cumulatively this evidence suggests that the benefits that can be achieved from systems thinking interventions could exceed all expectations when viewed from the level of higher system interactions.

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The three participating organisations had been using systems thinking methods for different periods of time since 2006 and all demonstrated a degree of sustainability in that the principles were embedded across all of the services and involved staff at all levels. While the limited scope of the study so far means that it would be unreasonable to make grand claims for the broader applicability and potential of systems thinking in the public sector the findings so far are extremely encouraging and further research on a larger scale is being planned.

For a summary of the Portsmouth City Council case study please turn to page 25. E N D

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J us t i f y i n g L e a n Rh i a n H am e r

Justifying lean Rhian Hamer, head of lean at the Ministry of Justice, describes the lean scene in government departments, providing review of the literature to date and an assessment of the way in which it has shaped the infancy of the Shared Services lean project.

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he success of change programmes is sporadic. Research suggests that at least 50% of business improvement programmes are destined to be deemed long-term failures, and a staggering 70% fail to achieve all of their intended benefits (Hammer and Champy, 2003). In 2008, a McKinsey survey of 3,199 world-wide executives found that only one transformation in three succeeds (Aiken and Keller, 2009).

So why do transformations fail?

Alexandra, Kotter and Lucey have all detailed extensive reasons for transformation failure: lack of leadership; no sense of urgency; disengaged workforce and lack of strategic direction, to name a few. Similarly, key findings of a study conducted by Kaye and Anderson (1999) found that organisations fail to sustain continuous improvement in the longer term and claim that a greater emphasis needs to be placed upon the role of senior management and communicating strategy.

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P rinciples and

It should be noted that the enablers depicted in the lean iceberg model (strategy and

purpose

These views are supported by Peter Hines et al who represent the enablers of a sustainable lean organisation in their lean iceberg model. This can be seen as a metaphor for the innovative, learning organisation that propagated Toyota’s original success. This model emphasises that sustainable lean Figure 1: Hines et al’s lean iceberg Model in manufacturing organisations cannot be created through the use of lean tools and six sigma methodologies alone. It is enabled by embedding a thorough understanding of the broader lean philosophy and culture.

alignment, leadership, behaviour and engagement) are not mutually exclusive, but are interlinked and support each other. For example, strategy deployment requires the cascading of strategic objectives and measures at appropriate levels throughout the organisation.

Objectives should be reflected in people’s personal objectives, ensuring that the entire workforce is fully engaged and aligned.

Similarly, it may be necessary to adapt leadership style to ensure they have the ability to support, motivate and develop team members at different stages of their improvement journey.

Does this model apply to public sector organisations?

Commissioned by the Scottish Executive in 2006, an evaluation of lean and its application within the public sector was carried out by Warwick Business School. The review investigated a series of lean

Strategy had been formed but had not been deployed throughout the depth and breadth of the organisation therefore none of the employees surveyed were able to articulate the strategic objectives, let alone demonstrate what they as individuals do to help the organisation pursue this strategy implementation projects across public sector organisations, detailed the effectiveness of the methodology and highlighted issues specific to the deployment of lean within this environment. Issues discovered include: too many procedures; a lack of customer focus; too many targets; a lack of awareness of strategic direction; a general belief that people are overworked and underpaid; people working in silos; and a lack of systems thinking and process flow.

Other ‘symptoms’ which make the application of lean difficult within the public sector have been identified by Bagley and Lewis (2008) and include:

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Lack of appreciation of counter-intuitive lean concepts Little understanding of end-to-end processes Unclear strategic priorities Staff resistance, particularly when lean is perceived as a means of cutting jobs

J us t i f y i n g L e a n Rh i a n H am e r

Our case study

Taking the above challenges and research into account, a recent case study from the Shared Services business within the Ministry of Justice began to explore the critical success factors for successful and sustainable lean implementation in the public sector. The review of this preliminary project created an opportunity to apply management theory to the real-world issues surrounding change.

Qualitative and quantitative data was collected from primary sources in an effort to understand everyday work and its relation to improvement activity.

One hundred questionnaires were distributed across a cross section of staff of all grades and from all departments within Shared Services. The questions were designed to test employee perception of change and put particular emphasis on their understanding of change initiatives such as lean and six sigma, employee contribution and involvement, innovation opportunities, the pace of change and perceived organisational benefits.

To obtain a qualitative perspective, eight semi-structured interviews were held with senior stakeholders to gather their views and opinions regarding change and the change programme itself.

The importance of visual management as a mechanism for employee engagement and the cascading of information throughout the organisation is widely accepted by lean adherents and, for this reason, a study of the visual management tools within Shared Services was conducted to provide insight into the level of employee engagement. A focus group made up of a cross-section of roles from different business areas were asked to evaluate ‘performance boards’ in use throughout the building. In addition an assessment of the performance metrics and targets, known as service level agreements (SLAs) was undertaken to determine the number of SLAs measured on a daily basis and more importantly their value in driving improvement activities.

Achieving the SLA or not had little effect on flexibility of labour; and complaints were not linked to those SLAs not met

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P rinciples and

Eighty-two questionnaires out of the 100 were returned, with adequate representation from each grade and a fairly even distribution across the core business areas: HR, Finance and Procurement. The research threw up some key issues:

purpose

The findings

Perceived value

Chart 1: Perceived value of change initiatives No benefit at all

6%

Partly beneficial

33%

Very beneficial

51%

Employee Engagement

There was a huge amount of bottom-up support from employees and it was very encouraging to see that few respondents (only 5 employees) felt that improvement initiatives were unbeneficial, with most respondents (61%) indicating that they thought initiatives such as six sigma and lean were ‘very beneficial’. (Chart 1)

Number of participants

Number of responses

Chart 2: Perception of process improvement

39%

A nice thing to get involved in

31%

18%

Part of your Seperate daily role from your work

12%

Noting to do with you

Perception

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Strategic Alignment

There was a lack of strategic awareness across all levels of staff within the business.

Strategy had been formed but had not been deployed throughout the depth and breadth of the organisation therefore none of the employees surveyed via the questionnaire were able to articulate the strategic objectives, let alone demonstrate what they as individuals do to help the organisation pursue this strategy. In the case of senior managers there was a demonstrated lack of clarity with regards to strategic objectives

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and the overall strategic direction of Shared Services which had not successfully aligned the change programme (and therefore improvement activity) with business goals.

Furthermore frontline staff were eager to get involved in improvement work with 63% of the improvement projects being initiated by their ideas, either via a staff suggestion scheme or through training requirements. Only 12% of projects originated with the senior management team, possibly suggesting a lack of buy-in at the senior level.

However, chart 2 shows that 39% of questionnaire respondents viewed process improvement as a ‘nice to have’, rather than integral to their daily roles.

In addition employee engagement via visual management was very poor.

Boards displayed out of date, irrelevant information and were not being used to display performance data or help drive improvements. Some of the comments made as part of the focus group activity include: “Currently CSA1s and 2s cannot contribute to the boards and therefore we have little interest in them” “They are good for hanging tinsel on at Xmas” “I would rather have things displayed visually on a performance board rather than receive numerous e-mails I might not read”

J us t i f y i n g L e a n Rh i a n H am e r

These comments point to a lack of engagement in visual management. The work of Hines et al and others suggests that visual management is a key enabler for sustainable change and it is therefore a concern that its sub-optimisation in Shared Services may be undermining the sustainability of the project.

Too many Targets

Astonishingly, the organisation measured around 330 SLAs across its services very few of which were linked to the end-to-end customer experience or used to drive improvement activity.

The table below gives a cross section of SLAs measured on a daily basis:

Table 1: 5 of 330 SLAs measured within MOJ Shared Services Service Level Agreement

Contact Centre

80% of calls answered within 15 seconds.

Finance

100% of expense queries acknowledged within 1 day.

Procurement

80% of invoices scanned into the system within 5 days

Human Resource

95% of return to work paperwork processed in 1 day of receipt, providing paperwork is transactable.

IT

95% of requesters advised of configuration report number within 1 hour

P rinciples and

purpose

It is interesting to note that these measures had been in place since the first day of operation and had never been updated.

However, analysis suggested that a large amount of effort was exerted to measure and track these SLAs. This can only be described as wasteful activity; few metrics were customer aligned, achieving the SLA or not had little effect on flexibility of labour; and complaints were not linked to those SLAs not met.

These findings support the work of Radnor (2008) and show that MOJ Shared Services has too many targets and that these targets may be hindering the effectiveness of its change programme.

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Business Area

Turnaround Strategy

The ultimate aim of any improvement programme must be sustainable change, with the realisation of long term business benefits. In line with the findings of the research described above, MOJ Shared Services re-designed its change programme to include critical success factors for sustainable change and to limit any known barriers to a successful implementation of lean.

In the next issue of LMJ we will explore how Shared Services has moved forward and discuss the applicability of the lean iceberg model within the public sector. What can be directly transferred from lessons learnt in industry and where do adjustments or perspective alterations need to be effected? E N D

The following works have informed this article. Readers may find these helpful in their live projects: Alexander, Larry D. (1985), Successfully Implementing Strategic Decisions, Long Range Planning, Volume 18, No 3, pp 91-97 Bagley, A and Lewis, E. (2008) “Debate: Why Aren’t We All Lean?” Public Money and Management, February, pp 10-11 Hines, P, Found, P. Griffiths, G and Harrison, R., (2008), Staying Lean. Thriving, Not Just Surviving. Lean Enterprise Research Centre Kaye, M. and Anderson, R. (1999), International Journal of Quality & Reliability Management. Volume 16, Number 5, pp 485-509 Kotter, J. P. (1995) “Why Transformation Efforts Fail”, Harvard Business Review, March/April, pp 59-67 Radnor, Z. (2008) “Muddled, massaging, manoeuvring or manipulated? A typology of organisational gaming”. International Journal of Productivity and Performance Management, Vol. 57, No. 4, pp 316-328 Radnor, Z., Walley, P., Stephens, A. and Bucci, G. (2006) Evaluation of the Lean Approach to Business Management and its use in the Public Sector. Scottish Executive Social Research Radnor, Z and Broaden, R. (2008) “Lean in Public Service – Panacea or Paradox”.

Public Money and Management. Volume 28, Issue 1, pp 3-7

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Radnor, Z and Walley, P. (2008) “Learning to walk before we try to run: adapting Lean for the Public Sector”. Public Money and Management. Volume 28, Issue 1. pp 13-20 Spear, S. and H. K. Bowen. 1999. “Decoding the DNA of the Toyota production system” Harvard Business Review (September-October), pp 97-106

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I n Ch a r g e B u t N ot I n C o n t r o l M ah o n y a n d R o dg e r s

Dominic Mahony and Chris Rodgers challenge leaders to face up to facts on change management and appreciating the influence of informal behaviours

In Charge But Not In Control I

sn’t it time we were less confused by the challenge of change? A 1954 Harvard Business Review article identified employee resistance to change as one of the most baffling and recalcitrant of the problems facing business executives. Fifty years later and we are still grappling with the challenge. Research shows that up to 85% of organisational change efforts fail and this has substantial repercussions, including reduced profitability and market share, immediate loss of talent and long-term attrition, and reduced employee engagement.

Too often, leaders underestimate the importance of the human side of change prioritising the formal elements of an organisation – its processes, systems and structures but overlooking the influential role played by informal interactions. The impact of power, politics, and the powerful grip of cultural assumptions on decision-making and performance, are dealt with superficially or, worse still, not at all.

How change happens – the conventional view

Conventional approaches to organisational change vary from tight methodologies to those that are more flexible. The former seek to achieve speed, decisiveness and control by imposing change on the organisation through a classic top-down approach and for many managers, this ‘heroic’ view is what change-leadership is all about.

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However, even if all of these elements are embraced fully (which largely speaking they are not) something vital is still missing. There remains a gap between the socially complex dynamics of real life organisations and the models and methodologies that dominate current practice.

P rinciples and

In between, education and training set out to inform and persuade people of the merit of required changes, and to modify their behaviours appropriately. They seek consistency, integration and structural alignment, through ordered programmes.

purpose

At the flexible end of the scale, joint problem-solving approaches involve a wider group of people; seeking to achieve broad agreement about how best to proceed and to create a sense of ownership for the desired changes. Such changes allow for a more inclusive view of the dynamics of organisational change and reflect a collaborative and participative style of leadership.

and pattern of these interactions in a deliberate and meaningful way.

Engaging with the hidden dynamics of change How change happens in practice

Whenever formal changes are announced or rumoured, people get together and talk about them. They share their perceptions, interpretations and evaluations of what is going on and as a consequence they decide how they will act in relation to the change proposals.

This response is universal. Everyone does it. We all have a basic need to make sense of the world in which we live and to act in ways that maintain our sense of competence in dealing with it. By speaking with others we can satisfy this need.

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In organisations, some of this sensemaking takes place during formal, structured meetings. Most of it, though, occurs informally, whether around the fringes of meetings or in other settings altogether. These might include chats by the coffee machine, private one-to-ones, banter and gossip at social gatherings, and so on. Outcomes emerge from this complex interplay of conversations, which happen continuously throughout the organisation and beyond. Managers can neither prevent nor control this activity (like everyone else, they will contribute to it). Indeed, formal change plans will themselves have originated and become formally adopted through this same conversational process, as the result of managers’ interactions, both formal and informal, with their personal and professional networks.

Crucially, then, it is not formal strategies, plans and programmes that change an organisation. It is how people talk about them and make sense of them and how they act as a result. Managers must realise a means for influencing the content

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Informal conversations, power relationships and political processes have a huge impact on organisational outcomes whether or not these are seen as legitimate. People ‘coalesce’ around interpretations of events and their actions will flow from these.

The informal coalition’s view of change stresses the complex, developing and emergent nature of the overall process.

Therefore, managers cannot plan and control change in the ways that conventional approaches imply. Instead, they can seek to influence outcomes, by working with these natural conversational dynamics to build active coalitions of support for desired changes.

In this way leaders are both in control and not in control at the same time – or in charge but not in control, if you prefer.

While specific decisions and actions can be ‘commanded and controlled’ by managers, within the levels of their delegated authority, the ultimate impact that these have on organisational outcomes cannot.

These will be significantly affected by the ways in which people perceive, interpret and evaluate what is going on. What emerges will then depend on which of these interpretations are shared, bought into and acted upon through the give and take of day-to-day interactions.

If people come together around themes which are aligned with management’s formally adopted position, the actions that flow from them are likely to support their implementation. However, if the themes that are organising informal conversations and actions run counter to the official line, the intended changes are likely to be frustrated or actively undermined.

I n Ch a r g e B u t N ot I n C o n t r o l D o m i n i c M ah o n y a n d C h r i s R o dg e r s

official agenda, policies and elements of organisational design in some new direction. ‘Action coalitions’ set out to bring about desired changes on the ground.

What this informal coalitions’ perspective means for leaders of organisational change is that they need to: Change the focus of their communication, from passing messages to helping people make sense of emerging issues and events. This also means tuning-in to those themes that are dominating everyday conversations and seeking to influence the outcomes that emerge.

Think culturally, rather than thinking about culture. The more that people make sense of events in a particular way, the more likely they are to make similar sense in the future. In this way, patterns of cultural assumptions are formed, which tend to channel ongoing sense-making down culturally familiar pathways. People take many of their cues for this sense-making from leaders’ everyday words and actions.

So leaders need to remain aware of the impact that their own behaviour has on the patterning process; and to think culturally when they interact with their team.

Editorial Comment

In looking to improve the odds of achieving successful organisational change, the only meaningful choice that leaders have is whether or not to actively engage with the complex social dynamics of their organisations. The above agenda will enable them to do so in a deliberate and informed way. E N D

On May 20 Dominic Mahony will be speaking on change management at The Lean Management Journal’s flagship event. Attend to learn more from this Olympian athlete and current team manager for the British Olympic modern pentathlon.

Engaging people in lean thinking and progressively embedding that thinking into the culture of the organisation is repeatedly cited as one of the greatest and most elusive challenges to creating lean enterprise. This article sheds valuable light on why this might be as well as offering practical advice on where leadership effort needs to be focused.

P rinciples and

Build coalitions of support for valueadding ideas and desired changes. ‘Issue coalitions’ aim to shift the organisation’s

Provide vision through everyday engagement. This is not about developing a vision that a leader communicates formally and documents on a website. It is about using everyday conversations and interactions to help employees gain perspective, realise their purpose, self-manage their processes and unlock their potential.

purpose

Act politically, which means accepting that organisations have natural political dynamics and that engaging with them constructively is possible.

Work with the inbuilt and irresolvable tensions and contradictions in organisations such as current vs. future; task vs. people; continuity vs. change; innovation vs. compliance; and so on. The aim is both to make these liveable for people and to exploit the potential for creativity that these tensions bring.

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The role of leaders in organisational change

Internationally recognised author Andrew Spanyi and LMJ board member Brenton Harder examine the potential and the pitfalls of lean in the service sector.

Lean at your service T

he application of lean principles in the service sector has always promised significant potential as a method for process improvement. Yet, many organisations sub-optimise the application of lean by failing to see it as a major cultural change that may take years to implement. Lean implementation is not simply a matter of drawing value stream maps (VSM) and attacking pain points with kaizen events; rather, it requires active and engaged leadership to avoid mistakes and missteps in the application of the broad principles. Why is this important? As Peter Hines wrote in Issue 01 of LMJ, “The critical issue with lean is not the tools, the value stream maps or kaizen events. It is about leadership, strategic alignment, behaviour and engaging people.” For optimum results, senior management needs to take responsibility for leading the cultural change, defining and improving the organisation’s end-to-end processes.

Why should leaders in the service sector care about lean, especially when Toyota, the exemplar from the manufacturing sector, has stumbled so badly? Here we consider five of the foremost dangers involved in transferring lean into services and start exploring how to avoid them.

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First, leadership engagement has been problematic in the manufacturing sector and may be even more so in the services industry. Lean emphasises flow and waste reduction, it focuses on enhancing value for customers by examining the value stream and hence is heavily customer centric. Executives in the service sector pay lip service to customer satisfaction and even talk about delighting customers, but what they really care about is profit. And there’s the rub. Reduced cycle times, less waste and better on time delivery does not immediately translate into better financial results, as Cooper and Maskell reported in their article “How to Manage Through Worse-Before-Better” (MIT Sloan Management Review, Summer 2008). That’s a big problem for firms in the service sector, many of which are publicly traded and where patience is not one of the prominent virtues of senior executives. One of the contributing factors to the lack of leadership engagement may be the way in which lean training is conducted for senior managers. They can be wooed by consultants stressing only the technical tool based aspects of lean and leaving out the leader’s role in practical delivery. Hype dominates at the expense of practical guidance for executives on their role, the time it takes to shift culture, and the probing questions they need to ask.

Secondly, lean programs can come across as tools and jargon heavy. Frequently, middle management is left with the task of deploying a project which has little alignment to their rewards and recognition schemes. Giving it a name is not the answer. The service sector has seen more than its share of programs over the years; quality, reengineering, balanced scorecard, just to name a few. Introducing VSM, kaizens, Total Productive Maintenance, kanban and a whole host of other terms that need a Japanese phrasebook to negotiate, is unlikely to meet with success unless supported.

The Japanese terminology can, and has, been successfully translated and this should be taken advantage of since, to the outsider, the extensive use of foreign expressions propagates an impression of cult tendencies. This is unlikely to play well in the service sector which is already overburdened

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Lean at your service Spanyi and Harder

with tool sets and jargon. Furthermore, from the point of view of executives in the service sector, they are fairly well read and will quickly recognise concepts in lean as having come from the work of Deming and Juran. They have seen it all and as soon as it’s a jargon riddled program there is an increased chance of a precipitous decline in management attention. One of the failures of management, especially in the service sector, is that once it’s been said leaders assume that it’s been done.

Thirdly, the linkage of lean to information technology (IT) has, so far, been sub-optimal.

This is especially problematic in the service sector where IT is ubiquitous. Often, powerful tools such as value stream maps are too cluttered. They fail to depict the departments that need to collaborate to create value and do not provide clear linkages to enabling IT systems as the example in Image 1 illustrates.

Fourthly, tasking middle management to deploy lean concepts is a typical mistake made in the industrial sector. According to a survey conducted by The Lean Enterprise Institute (LEI), middle manager resistance was the top ranked obstacle to success with lean, followed closely by lack of implementation know how, and employee resistance. These obstacles are real and they may well be related to the lack of sustainable engagement of senior executives.

In the service sector, where organisations are complex and product proliferation runs rampant, loyalty is assigned to department, product line or geography. It’s critical to find a better way to engage the members of the leadership team and to communicate that lean concepts take years to embed. Executives need to pay close attention to the value that lean concepts can create throughout the life of multiple projects. Tasking middle management to deploy lean concepts is not the way to go. It generally results in trying to PowerPoint the way to success – and we all know that won’t work.

Image 1: Clogged Value Stream Map

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P rinciples and

purpose

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Finally, executives can learn from mistakes in the manufacturing sector in failing to align recognition and reward systems with customer value creation. In the absence of this alignment, the lean activities involved in VSM and kaizen events, will be little more than a supplemental activity before managers get back to their ‘real jobs’.

There is no doubt that lean concepts are useful when properly applied in the service industry. The five lean principles defined by the LEI and depicted in Table 1 do have merit in the service sector.

Table 1: Lean principles

Provide the value actually desired by customers Identify the value stream for each product Line up the value stream for each product Line up the remaining steps in a continuous flow Let the customer pull value from the firm

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Better application of lean in the service sector will rely on toning down the hype and turning up concepts and practices – creating value for both customers and companies as the root philosophies of Deming and Juran guide us to.

In elevating lean concepts and practices, it may be useful to integrate lean concepts and practices with the broad principles of process management, summarised in Table 2 and outlined in More for Less: The Power of Process Management. This will take the focus off the method per se and place it squarely where it belongs. This will require that key tools such as VSM be applied to the end-to-end business processes, promoting focus on crossdepartmental collaboration, linkage to IT, aligning recognition and reward systems, and embedding key metrics on time and quality into the scorecard of the senior leadership team.

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Table 2: Key principles in process management

1 2 3 4 5 6 7 8

Look at the business from the outside-in, from the customer’s perspective Tightly integrate strategy with endto-end business processes Articulate strategy in a process context to inspire frontline staff Design end-to-end business processes to deliver on strategic goals Ensure that organisation design enables end-to-end business process execution Deploy enabling technology based on the value added to end-to-end business process performance Hard wire the end-to-end process performance measurement system into operating reviews Sustain focus and alignment This may assist in better engaging senior managers and help to avoid the mistake of making it a program flavour of the year. In addition, for success in applying lean in the service sector, it’s important to take action to mitigate the mistakes outlined above through a focus on the following: Better analytics are needed to express the likely results of cycle time reduction and waste elimination in financial terms.

If it’s true that financial results will lag operational results then let’s at least be able to forecast when the operational results will become visible. This will require close collaboration between lean practitioners and experts in business intelligence.

Bigger projects that are aligned and owned by the business are critical for success with lean in the service sector. Lean cannot be seen as just a central initiative. The practice of using a value stream map to identify opportunities and then launching a series of small kaizen events will not work in an environment that is fragmented in terms of both organisation design and

Lean at your service Spanyi and Harder

IT systems. Just consider the typical bank that offers loans. Such a bank will have car loans, mortgages, credit card loans, home equity loans. Each loan area will have its own marketing department and probably its own IT system, with a set of complex and hard to maintain interfaces. Eighty percent of the activities in the end-to-end value chain for each type of loan will be the same and 20% will be different. Small kaizen events, diving into the detail of each type of loan, may produce some short term results but will do little to engage leadership and are unlikely to attract the attention of senior IT people. Larger end-to-end projects are needed to drive cross-product and cross-department collaboration, reduce redundant effort, engage IT, and reveal where the opportunities for recognition and reward alignment reside.

Better training is needed too. Lean training in the service sector should include only those tools that are directly applicable to services. It wouldn’t hurt to tone down the use of Japanese terms either, although that may be difficult for hard core lean disciples.

The area requiring greatest improvement is the training provided to executives and senior managers, who deserve to receive

practical guidance on their roles in applying lean practices for greater value creation.

This calls for greater emphasis and clarity around the time it takes to shift culture and the specific probing questions they need to ask. Here, it would be useful to embed key leadership concepts from the body of literature on change management such as Kotter’s Leading Change to address how leaders can create leadership a sense of urgency and form a guiding coalition.

The ultimate success of lean in the service sector will depend on the extent to which a tight linkage can be made with information systems, the close alignment of improvement projects with rewards and recognition systems, and the ability of senior managers to understand the firm’s end-to-end business processes in creating value. E N D

Andrew Spanyi is author of the highly acclaimed More for Less: The Power of Process Management and Business Process Management is a Team Sport: Play It to Win! please visit www.spanyi.com for more details.

Editorial Comment

It is constantly surprising that after so many years of improvement initiatives there is still so much diversity of view in how and what should be done for success.

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Middle management is often placed between daily work which has no direct customer contact and top-down strategy with no link to daily work. It is therefore no wonder that gaining their engagement is difficult and I agree that Japanese terminology often makes it harder still. It is time to see lean tools for what they are – enablers, not solutions in themselves. Cut out the mystique.

P rinciples and

Focus on lean tools will not, in my experience, provide better projects or better leadership development. You must make management understand the work and from that point develop the right approach to fulfil customer needs.

purpose

The five key pitfalls highlighted here are real and can be recognised in many companies but the suggested solutions could perhaps be expanded further. I agree that the strategy should be aligned with customer needs but implementers must also remember to constantly refer back to those customer needs when applying strategy to process improvement.

Tristan Chapman, CI programme manager, explains the increasing role of collaboration in extending and embedding continuous improvement (CI) across the public sector.

Collaboration for CI A public sector story

F

ollowing early successes with continuous improvement techniques in a small number of government departments a cross-government group was formed in July 2008. Comprising individuals responsible for leading improvement programmes in different governments departments and public service organisations, this group shared a common belief that continuous improvement (CI) had a significant and enduring role to play in public service reform.

The group deliberately proscribed that its work was not solely to engage with those implementing lean programmes but also all other CI initiatives going forward across government under a variety of banners. Chaired by Bernadette Kenny, director general at HMRC and supported by the Cabinet Office, the group became the Innovation and Continuous Improvement (ICI) group.

Initial members of the group included the HM Courts Service, DWP, HMRC, MoD, Home Office and NHS. Whilst many of these members were at different stages in their CI development, the group passionately believed that they could learn from each other; share best practice and encourage cross-government collaboration. The first meeting shared disparate experiences and progress to date including information from armed forces engineering projects, some as far as eight years into their initiatives, and news of embryonic lean journeys beginning in HM Courts Service. There was a passionate belief that those departments about to embark on CI would benefit significantly from this knowledge sharing and a recognition that since the engagement of senior leadership teams was both challenging and critical to project success, the group had a responsibility to help them understand their role in taking CI forwards.

Finally, the group identified an opportunity to deliver further benefit from CI by working across delivery systems with multiple organisations.

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Learning from a year of shared activity A series of ‘go and see’ visits produced a body of case study material which gave a picture of

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how CI was developing across the public sector.

The different approaches revealed reflect the varying organisational structures and cultures that exist. Across independent and autonomous organisations like NHS Trusts and Police Forces there is a combination of self grown CI and central programmes which individual organisations buy into on a voluntary basis (Operation QUEST/NHS Productive series). It is notable that both of these programmes are tailored to those organisations and do not use the lean badge in any form. In large organisations like HMRC, Department of Work and Pensions (DWP) and HM Courts Service, programmes are centrally driven with teams of trained facilitators rolling out timetabled programmes with largely standardised approaches to lean tools such as visual management and standard operating procedures. All three of these large organisations have used the lean badge at some point, although each is moving towards integrating lean into business as usual.

Regardless of variations in approach – there have been significant gains. Highlights include: The HMRC National Insurance Contributions Office site (NICO) has increased productivity by 15-30% across their processes to meet efficiency savings required by the previous Spending Review. They have improved customer service in terms of waiting times; increased staff engagement and leadership capability and gained Customer Service Excellence accreditation. NICO model office tours are now regularly booked with private, as well as public sector colleagues, seeking to learn from the lessons gained over the last five years The Police Operation QUEST programmes expect to see at least a 5:1 return on investment over a three year period, whilst also improving customer service. Projects typically release frontline officer time to be re-deployed in other priority areas at the discretion of individual police force management

Collaboration for CI Tristan Chapman

Using this body of case studies ICI group produced a short paper highlighting what we now know about CI in public service. The paper concluded that CI approaches can deliver significant and sustainable results in the public service context, that we have an understanding of what is required to succeed, that fixes cannot be short term and should not be used solely to strip out cost. Findings were shared with a selection of senior public service leaders at an event at the end of the year. (Copies of this paper are available to members of the public sector from Tristan.Chapman@cabinet-office.x.gsi.gov.uk)

Developing multi-agency continuous improvement

The most ambitious of the ICI group’s objectives was to run a multi-organisation pilot to test the hypothesis that additional benefit could be achieved if through applying aligned CI approaches to a delivery chain spanning multiple organisations.

This is something which has been established in areas of the private sector, but in its infancy in UK public service.

To understand this process and provide an opening for the project the team looked at just one type of offence. They used common assault, a high volume crime (or a ‘runner’ in lean terms) with a high impact on victims. As part of the analysis research was conducted into best practice elsewhere, interviews were conducted with victims and witnesses and a series of workshops were held with local staff to produce value stream maps of the entire delivery chain. Whilst there were many admirable instances of good practice, when the system was considered

Tristan Chapman is part of the Capability Building Programme team and national programme manager for ‘Cross-CJS’ Continuous Improvement.

He convenes the Innovation and Continuous Improvement (ICI) group, chaired by Bernadette Kenny, director general for Personal Tax, HMRC. The views expressed in this article are his own and do not represent government policy.

C ase studies and

Three bids were received to work with this team which were assessed in terms of deliverability and wider strategic relevance. A bid to look at the criminal justice system in partnership with Sussex Criminal Justice Board (CJB) was successful and over three months the CBP team, joined by local staff,

The criminal justice system in the UK has at least six agencies working in partnership through the local criminal justice boards and are responsible for the working of the CJS in that area. In the pilot, it was agreed that the end-to-end process to be improved should be defined as starting with the initial crime and progress through to the point of sentencing in court. This process involved three of the six agencies: Police, Crown Prosecution Service and HM Courts Service. On a simple level the Police respond to a reported crime, investigate, arrest suspects and create a file of evidence; the Crown Prosecution Service make decision (in a majority of cases) whether to charge defendants and undertake prosecutions; and hearings and trials are managed by the HM Courts Service and heard by the independent magistracy or judiciary.

implementation

The group used the Capability Building programme (CBP) team and approach to run the pilot project.

The CBP was originally launched by the Cabinet Office and is now part of the National School of Government. The programme is a public service resource which recruits professionals from within the sector, on a part time basis, to work on new and innovative projects. Twelve public service professionals with lean, customer insight and public policy experience were recruited to assist on this ICI pilot project.

conducted an analytical piece of work to assess the opportunity for cross system improvement. They then made recommendations for action.

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The RAF can now service a tornado jet engine in hours, a process which used to take weeks.

Improvements have been made by introducing a standardised six stage cell production line.

Lean tools such as visual management, 5S and standard operating procedures have been deployed here with significant effect

as a whole, substantially more opportunities for improvement appeared. There were: Examples of duplication - multiple electronic and paper files being prepared and maintained in the different agencies Examples of files passed back and forwards between the three organisations due failure to meet right first time standards Cases taking a long time to pass through the system with a low % of active working time Trials and hearings regularly being adjourned or discontinued, with the associated resources from across the three agencies being wasted Although some of these findings suggest opportunities for quick solutions, these are enduring problems which are replicated across the country and have featured in this very complex delivery chain for a long time.

These challenges must be tackled collectively and the complexity involved means results will not be achieved overnight. The CBP team recommended to the Sussex CJB that a joint team of frontline staff, using CI methodologies, tackle these issues and accordingly the Sussex CJB have commissioned a local part time team to start the process of continuous improvement.

Implementation hasn’t been without its challenges and early lessons include: The cross organisational team don’t have a single agreed methodology to draw on Each organisation has pressing internal challenges which distract staff from cross boundary work Multiple reporting loops increase the bureaucracy for a cross agency team Working outside individual agency structures leaves a gap in terms of regular reporting to senior responsible officers Despite these challenges the team are starting to see signs of improvement. Definitive conclusions would be premature but the number of ineffective

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Editorial Comment

trials has started to reduce and five new projects are now running with other CJBs, building on learning from the Sussex pilot.

The Future

Our case study work and ICI discussions indicate that CI is certainly increasing performance, reducing costs and improving the service we provide to our customers. However, we have seen that using CI only for cost-cutting, and not fully engaging frontline staff – does not create real or sustainable change. This is a major concern in these challenging economic times.

Our pilot in multi-agency CI has shown that there is a significant opportunity for further improvement, working across delivery chains. Fully realising the potential benefits will mean continued collaborative work across the group to build capability and best practice.

Over the next 12 month it is planned that the pace and scale of the group’s work will increase. Over a thousand CI facilitators across central government will share in the group’s activities augmenting the already diverse pool of experience and improving understanding of the available tools, techniques and professional accreditation programmes in action. We will complement this with the expertise of the National School of Government, who will help those agencies new to CI benefit from the shared knowledge resource.

There is little doubt that CI plays a critical role in developing a public sector that meets the needs of its customers, particularly in times of reducing resources. However, a collaborative approach could increase the potential of CI exponentially thereby enabling us to build on each other’s learning and successes and open new opportunities for improvement across delivery systems. E N D

Collaboration is key to enabling the creation of lean enterprises which transcend structural boundaries. The ICI group have made an important step in realising that their combined efforts will only have real impact if their purpose is not only focused on cost or waste reduction but instead on ensuring that customer values are understood and delivered. An opportunity for further improvement and the development of a single methodology across the group might be to invest further time in understanding exactly what this value is. Then the key challenge, given the proliferation of CI facilitators across central government, will be how to share knowledge efficiently and effectively.

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lean housing services Keivan Zokaei

P

A sytems journey to lean housing services

ortsmouth City Council is a unitary local authority on the English south coast and has retained direct ownership and management of its housing stock. The department has 600 staff and an operational budget of £80m. The housing service has become one of the public sector’s most fully-developed examples of systems thinking.

Extensive demand analysis throughout the department revealed that managing in accord with centralised housing policies was resulting in poorer services for local residents. The first systems thinking intervention to occur at Portsmouth took place within the repairs and maintenance service.

The initial process began with selecting a team to undertake ‘check’ (the first stage in the systems thinking approach of ‘Check-Plan-Do’ proposed by Seddon, 2003), who were drawn from throughout the repairs and maintenance service structure.

Findings

Process capability and flow: As the above were agreed to be measures of what mattered to the customer, the team investigated the capability of the service to deliver against these measures.

Analysis of true end-to-end times revealed it was taking up to 98 days for a repair to be completed, with a mean time of 24 days. The team found endto-end times for repairs based on historical records were in some cases substantially longer with 15% of all repairs requiring four or more visits for a job to be completed. The flow of this work was mapped from the initial receipt of a request for repair through to completion of the task. Many issues were discovered along the way, for example: The pre- and post-inspections carried out on repairs by non-technical staff to check operatives were doing their job were adding no value to the customer and were causing delay and inconvenience Staff were focussed on meeting budgetary targets and improving KPI scores The service was reactive rather than proactive and good service was being judged on the quantity of complaints received rather than direct feedback from residents

C ase studies and

Demand: Demand analysis showed that failure demand (the result of not doing something or doing something wrong) was running at about 60%.

Examples of the failure demand experienced were: “I reported a repair but have not heard anything

Moving forward, work was therefore measured against these criteria refocusing activity on the needs of the customer as specified by the customer.

implementation

Defining the purpose of the system from customers view point: After an initial period spent experiencing customer phone calls, the check team were given an insight into the customer’s local housing requirements from the system. The purpose of the system was agreed to be – providing the right repair at the right time. This was in contrast to the existing de facto purpose, which paid more attention to the council’s strategies and business plans, focusing on measures of activity for elements of work over specified time periods or budget expenditure or against Key Performance Indicators (KPIs).

since?”, “You’ve been to repair but it’s not finished”, “I’m unhappy with the quality of the repair”, “I need a repair fixed again” (repeat request) or “You said you’d be here but you didn’t turn up”. What mattered to customers (value demand) was that jobs would be: completed in one visit would stay fixed, not requiring another call to the council for further repair would be undertaken either, as soon as possible or at a time convenient to the customer

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Reporting on one of the three case studies which contributed to LERC’s recent research foray into systems thinking lean in public services.

Dr Keivan Zokaei’s account of this research can be found on p 7.

Contractors were carrying little or no stock on their vans, as the contractor companies did not trust their workmen not to use the stock to do other things. As a result, contractors had to make several visits to a residence in order to complete a single job Redesign: The team agreed that there were only three value steps in the process from the customer’s perspective: Ensuring access to the property Diagnosis of the problem Completion of the repair Portsmouth now carries out repairs when they find them, rather than batching them into planned maintenance programmes. If a kitchen or boiler

needs replacing on the professional judgement of the tradesman this is carried out at the convenience of the customer.

The external decorations programme was previously carried out in a five year cycle. However, the changes made mean that currently 40% of the blocks have external decorations over five years old and yet there has been no increase in related demands.

Overall costs per reactive repair job have fallen by 7%. Although more work is taking place categorised as reactive repairs, by removing the arbitrary distinction between planned and reactive repairs Portsmouth discovered that the savings from the planned maintenance budget more than make up for the increase in total reactive repair costs. Overall reactive repair costs have also fallen year by year.

Improvements Summary Before

After

Purpose

Manage all activity in order to meet the targets and keep down costs

To do the right repair at the right time.

Measures End to end

24 day average for all repairs

Down to average of 6.9 days to fix the originally reported repair and 11.2 days to fix all repairs identified at the property

Failure demand

60%

Currently running at approximately 14% for repairs

Customer satisfaction

Old MORI measures were running at 98% for the service.

Repairs service has recorded an average of 99% customer satisfaction for past 6 months

However, true satisfaction rates with the old repairs service, as measured against new criteria, was in fact 60% Right First Time

Not measured

91.8%

Appointments Not measured kept

77.5%

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Conclusions

Customers are experiencing dramatic benefits from redesign. The service continues to learn by listening to customers and ensuring the information gathered is used to continuously improve services. Regulations and incentives such as targets or corporate assessments, work to the detriment of the customer, they hinder individuality, stifle progress and prevent local housing authorities from allocating resources to those most in need. E N D

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Part two of BAE’s lean journey pushes the manufacturing facilities into the submarine construction process.

Matt Anderson, head of manufacturing engineering at BAE Systems Submarine Solutions explains how their approach modulated for the unique culture and traditions of construction.

Submarine lean F

ollowing the successful implementation of lean principles in our manufacturing facilities (see LMJ, Issue 03), work was initiated to analyse the submarine construction process. A submarine is designed to be as small as practical, leading to a high density of components and meaning that controlled assembly and sequence of build are extremely important in driving efficient build. The majority of the submarine construction takes place in the Devonshire Dock Hall, the largest construction hall of its kind in Europe. The construction element of submarine build takes around four years and consumes around 2 million man hours.

process on the vessels. This analysis identified numerous problems that were causing not only high non-value adding (NVA) work, but also low right first time (RFT), out-of-sequence working and scrap. A spaghetti diagram, showing the large amount of walking required is shown below. Operators were not only completing component processing or fitting tasks but were also seeking parts, tools and information. This often led to late identification of problems which arose only once everything for the task had been pulled together, which caused work to stop and start regularly. The mapping also showed that the NVA activities were the most unpredictable, with large variances in time taken to locate some information, tools or parts. This added a further incentive to reduce the NVA – it would increase the predictability of the process.

In construction, the product stays stationary and the workers move to the product. Differing phases of the build require varying skills, resulting in a transient and changing workforce which slows lean implementation in comparison to more stable environments where the product moves to the worker.

The problems found during analysis were not new, but previous attempts to solve them had focused on the effects, not the root causes. In response to the issues identified from the VSM, a set of processes were developed across the four functions of planning, logistics, construction and quality to effect improvement. This was a departure from the function-based problem solving previously employed by the business.

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The Devonshire Dock Hall, Barrow-in-Furness

The implementation of lean principles in this large scale, long duration, heavy construction environment provided some very distinct challenges. As in the manufacturing facilities, the analysis started with value stream mapping (VSM) and spaghetti diagrams; this time of the pipe fitting

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To improve performance, the team developed and implemented 32 key principles into construction which collectively became known as Construction Vision. The principles revolved around giving the worker everything they require, in manageable chunks, in the right order, delivered as close to point of fit as possible, and with progressive quality involvement to ensure standards are achieved with a higher RFT.

S ubm a r i n e L e a n M a t t A n d e r s o n

A spaghetti diagram of the pipe fitting process

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The major capital investment in this implementation key were the work towers (approx £2 million). These were designed to become the focal point for construction of a build unit. The towers were designed to house the necessary parts, tools, information, and a workshop and office, bringing everybody associated with the build unit closer to the workface. Team leaders and managers were based in the towers along with the resident quality inspector. All meetings were held on the tower, further emphasising the need to support the build schedule and process.

Delivering kits and work packs to the towers led to reductions in transport, movement and waiting times. The inclusion of quality personnel on the

C ase studies and

Within the planning function, work order (WO) sizes were standardised to 80 hours (approximately one weeks’ work for two people), as a first step towards production levelling and creating an artificial ‘takt’ within the long build programme.

In addition, everything required for the job was identified at the planning stage, including drawings and standards, specialist tools, jigs and all parts.

This sounds simple but these were the sort of items that had been traditionally held in stores and collected when required, consequently they did not appear in the bill of material. This was

changed so that work packs and kits are now delivered to point of use . Logistics also held kit viewing sessions four weeks before WO start, which allowed the production team leader with logistics to undertake any problem solving activity in time for the start of the WO thus increasing RFT and reducing stoppages. Minimum and maximum levels for inventory were also easily set as each work package was of a standard size – something that was very difficult to do when work package size varied significantly. The standard 80hr work package size also allowed much easier allocation and management of work tasks once issued.

implementation

The construction process had largely been the same for the last 25 years, so a change of this proportion needed significant positioning to have a pilot project agreed. The team used not only the VSM results but also created simulations, demonstrations and used visits as key tools to engage with the wider management population, and convince them that something different needed to be done to improve results. As in the manufacturing facilities, lean terminology was kept to a minimum and lean principles were integrated with existing processes to create the new way of working. A pilot was conducted on a bounded area (the Bridge Fin of the 2nd Astute Class submarine) to demonstrate the potential benefits and gain buy-in before roll-out.

Construction vision: BAE’s new set of guiding principals for the construction process

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towers enhanced in-process inspection coupled with a ruggedised laptops, improved teamworking and faster data feedback.

Investment in people has also helped with additional recruitment into planning, logistics and quality allowing the provision of improved service to construction. A production manager from one of the first implementation areas commented, “The towers have helped us to become one team with planning, quality and logistics, where everyone gets around the table to sort issues, which has helped improve the cost performance of the team to over one” (in terms of Earned Value Management CPI).

As each WO is completed, a new knowledge capture process allows lessons learned to be captured with the WO and fed into subsequent activities by the planning function. A 3Cs (Concern, Containment, Countermeasure) process was also implemented on the towers to aid problem resolution, along with 5S principles to increase management control and facilitate Visual

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The work towers alongside the 3rd of Class Astute submarine

S ubm a r i n e L e a n M a t t A n d e r s o n

Management across the construction hall. The new process was progressively rolled out over an 18 month period on an area by area basis.

A new measurement system confirmed the implementation status of each of the 32 processes.

The chart below summarises the key areas that the Construction Vision project tackled:

Reduce Waste

Kitting

Improve Right First Time

More Sequence Discipline

Plan Quality Checks

80hr Work Pack

Learn and Improve

Easier to Manage

Better Support

Knowledge Capture

Visual Factory

Work Order Signoff

Work Pack Creation

Inspector on Tower

Work Tower

Faster Data Feedback

3C’s System Allocate Tasks Material Control

Meetings on Tower

Mgmt Team and Workforce Close Work Tower

Results:

Material availability has improved through kitting process enabling more work orders to start on time

Free up workshop space for other uses

Helped schedule performance on Boat 3 Understood root causes of issues for inclusion into Future Submarine programme

Knowledge capture - over 700 issues captured for action on Boat 4 85% of managers and team leaders believe it makes their job easier

C ase studies and

Defect reduction estimated saving of £5 million across class

10% saving on construction man hours on Boats 3, 4, 5, 6 and 7, totalling £6 million net saving

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Reduction in defects of 35%, increased our proactive inspection

implementation

Safety risks reduced by 38%, reduced number of trip hazards, reduced scaffolding, improved housekeeping

What next?

The challenge for the business now is to embed and sustain the key principles implemented during Construction Vision, and create a culture of continuous improvement to constantly challenge the way we work. These principles should cease to be the vision and simply become the everyday of how we build submarines.

Key Learning Points

Use the VSM to highlight the issues Pilot the approach to gain buy-in & prove the philosophy Understand the process, understand the root causes – not just the effects Use go/look /see to demonstrate problems Use appropriate language Roll-out at a pace that allows consistent & robust implementation Look across functional processes Back-up on-job experience with classroom training

Part one of this article can be found in LMJ, Issue 03, March/April 2010. E N D

Editorial Comment

This is a fine, practical example of lean in action on a large scale and with a high degree of commitment. I am not surprised to read about the struggle to untangle the production process to “become one team with planning, quality, and logistics.” This is an admirable and necessary goal but it is just a beginning – a goal which is intrinsic to typical lean thinking around non-value adding work and right first time. While these are important readers are referred to the comment made in LMJ Issue 01 in the article “Reflections on the fabric of the Toyota Production System”:

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Readers are encouraged “to think beyond the prevailing explanations of lean and consider the possibility that the fabric of the Toyota Production System is more closely aligned with the usage of Taguchi’s Loss Function thinking than has been acknowledged in the lean literature, which remains dominated by a part-like focus on efforts such as single-piece flow, zero defects, zero waste, and the elimination of non-value work. Prevailing explanations needlessly limit lean to shop-floor applications associated with volume production and continue to view employees as interchangeable parts.”

While a submarine is clearly not “volume production,” this article reveals to me the classic lean focus on non-value added efforts, for which the focus on parts that are “good and equally good” is not being challenged. As such, continuous improvement ends when “first time quality is achieved.”

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Organisational Evolution! Mike Rother

Organisational Evolution!

T

here is a lot going on. Global challenges, social changes; how can a company be adaptive, innovative and in-sync with these dynamic conditions? In the field of management the answer seems to be represented in a shift from control orientated approaches to a focus on developing people.

What I am involved in researching, and would like to share with you, is a highly effective approach to improvement and adaptiveness, for any organisation, focusing specifically on the question:

What is the role of managers and leaders?

Obstacles We are here

We want to be here Unclear Territory

Fortunately, there’s a kata for that; let me explain further. Leaders and managers must learn to recognise and direct their own and their workers’ behaviour patterns. There are key patterns which will help develop capability.

In traditional karate terminology such patterns are called kata, meaning a routine, method or a way of doing something that is practiced in order to build skill.

What I call the improvement kata is the core routine by which Toyota teaches its people improvement skills. But the improvement kata is not Toyota-specific, it is universal and can be adopted and learned in any organisation.

It is often thought that adaptation and innovation are not skills to be mastered or learnt. It is time to discard this assumption, because by practicing the improvement kata anyone can learn the process of innovation. E N D

Mike Rother will be delivering the keynote presentation at the LERC Annual Conference – attend this event to gain further insight into his methodologies and thought leadership. See p.34 to read John Bicheno’s review of Mike’s most recent work.

C ase studies and

There is a better way of mobilising your organisation’s capabilities. A new way of managing, explored in my own work and that of authors like Robert Austin, John Shook and Stephen Spear, teaches an effective way of working through unpredictable obstacles toward challenging objectives every day and across the entire organisation. This approach is not about solutions.

It is about the capability to develop solutions. We must remember that since the future lies beyond what we can see, solutions that fit today’s problems may not remain suitable for tomorrow’s challenges.

So, it is not solutions alone – whether they are lean techniques, or any others – that generate sustained competitive advantage. Rather, it is the degree to which we develop and utilise human capability to understand conditions and create new solutions, again and again. Developing such skills and culture in an organisation is the responsibility of its leadership and management.

implementation

Humans have great ability to learn, improve, innovate and create but we must lead and manage ourselves in a way that taps into and utilises this. So far the concept of a learning organisation has been tough to operationalise, but an emerging discussion around management could change that.

“Nothing within a horizon can have a fixed definition. Every step taken alters the horizon, changes the field of vision, causing us to see what had been thus far circumscribed as something quite different.”

- James P. Carse, New York University

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Mike Rother, engineer, lecturer and author, questions what the place of leaders and managers is in today’s business environment. What are you doing to ensure your organisation thrives on the challenge?

B OO K R E V IE W J o h n B i ch e n o

John Bicheno reviews Toyota Kata

by Mike Rother, McGraw Hill, 2010

B

ooks with ‘Toyota’ in the title used to guarantee big sales, sometimes without justification. Since the Toyota accelerator/brake debacle it has become fashionable to say that Toyota failed TPS, not vice versa. A simplification?

Did Black and Dekker fail MRP, Motorola fail Six Sigma or Ford fail Deming? Hardly.

It behooves lean practitioners to probe more deeply for the truth. As John Shook said: “It takes two to A3,” so it is with lean.

Toyota’s recent troubles are a reminder that the last word on lean will never be said, but it would be a pity if they affected sales of this important contribution. Mike Rother is co-author of one of the most influential books on lean, Learning to See, which took an old tool (mapping) and showed its potential in a new light. So it is with this book, with new insight on old concepts like PDCA, kaizen events, standard work, planning, change, and coaching.

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Controversially, Mike is critical of kaizen events, saying that to store up ideas for lengthy periods and then implement them in a blitz is not only wasteful but also de-motivating and often unsustainable.

Hence kata, a karate sequence practiced endlessly by learners seeking perfection under coaching by a master. Lean kata involves every day continuous improvement via PDCA and standard work.

The book is focused on problem solving kata, planning kata, improvement kata, and coaching kata.

On standard work, Mike discusses the often-confused ideas of target condition, standardised work and work standards.

On the target, or rather the series of

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target conditions that lie ahead, he explains that it is about the ‘what’, not the ‘how’ or countermeasures.

Defining the target condition helps with the learning necessary to get there though I must confess I was disappointed to find no mention of TWI (Training Within Industry) in this learning-to-get-there appraisal. This trilogy of job instruction, job methods, and job relations has been a Toyota foundation for 60 years and would have fitted in beautifully with the themes of the book.

A central and valuable feature throughout the book is the Five Questions that should be repeated again and again over short cycles: What is the target condition, or challenge?

What is the condition now?

What obstacles are now preventing you from reaching the target condition?

What is the next step? (To re-start the PDCA cycle) Where can we go and see what we have learned?

Readers will recognise some similarity with Goldratt’s Identify, Exploit, Subordinate, Elevate, Repeat cycle, but Rother’s is more general, more challenging, and builds in learning.

We very much look forward to discussing the issues raised by this notable contribution with Mike at the LERC conference in July. E N D

EVENTS Announcing the launch of LMJs own flagship event. Despite continued uncertainty in the business world, the proactive are continuing to seek out opportunities to improve. Join leaders, key stakeholders and implementers of change for a day of listening, challenging and taking action.

Other events from our media partners and associated organisations include:

Inspiring Operational Excellence: Leading Organisational Change

May 20 Kenilworth, Warwickshire Our flagship event launches!

LERC Lean Leadership Course June 7 to 9, Cardiff

A new 3 day workshop designed for senior staff.

A major stepping stone towards creating true lean enterprise your organisation. It draws on the results of LERC’s SUCCESS research project, which examined the ingredients for successful and sustained lean transformation.

LERC Annual Conference

With participation from GKN, LINPAC, BT, Credit Suisse, BNP Paribas, Adnams, Edward de Bono Foundation and more this is a date not to miss.

See www.leanmj.com/events for details and to register.

July 6, SWALEC Stadium, Carfiff This well established thought leadership event will be keynoted this year by Mike Rother, author of Toyota Kata and expert on management and leadership approaches.

Go to www.leanenterprise.org.uk for updates and booking.

IQPC Lean Leaders Meeting

July 5 to 7, Canary Wharf, London A leader-to-leader debate driven forum to address how to embed lean into operations and culture. Find out more at www.leaders-in-lean.com LMJ are media partners for this IQPC event.

Subscribers to the journal will receive discounted rates for the exclusive meeting.

Nagara Lean Games Day

July 8, Cranfield School of Management, Milton Keynes Hands-on training in lean logistics through a new simulation game. This FREE session encourages process optimisation and includes a grounding in lean theory. Find out more at www.mobius.eu

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Come and discover the why, what and how of supporting your organisation through change initiatives and creating a sustainable environment for constant improvement.

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