Evolving Excellence

Win Signed Books Written by Bob Emiliani

Bob Emiliani is having another book contest. His books contain an abundance of practical new information on Lean leadership and the history of Lean management. I recommend them highly. Go to his website via this link and follow the contest instructions.

You can read many of his articles at Superfactory.

"Clicking" with lean.

Guest author: Dan Markovitz

I just listened to a terrific Talk of the Nation segment on Ori and Rom Brafman's new book, Click: The Magic of Instant Connections. The book studies the way in which people "click" with others, and some of the key elements in forging that connection. The analysis isn't always exactly earth-shattering -- we click better when we share something in common, or when we show some vulnerability. What's really eye-opening, however, is the improvement in performance of teams that click.

As Matt May describes it in his American Express Open Forum post on the book,

Researchers in one study took a representative group of first-year MBAs, asked them to list ten classmates they clicked with most, then divided the entire group into several three-person teams. Unbeknownst to the students, half of the teams were made up entirely of clickers, while the other half wasn’t. The teams were given an innovation exercise: make a 3D abstract model based on a given blueprint, using Tinkertoys, straws, wooden sticks, and macaroni.

 

You can probably guess the results. What’s most surprising, though, is the magnitude of difference in performance. The click teams successfully constructed 20 percent more models. In a followup exercise, one involving a more analytical activity, the click teams were 70 percent more accurate than the non-click teams.

One of the primary accelerators in forging these connections (again, no surprise here) is proximity: we click better with people who are physically closer to us and with whom we spend more time. And this made me think of the really impressive examples of standard work for managers visible at Lantech and Group Health.

I've written about them both on my TimeBack blog (Lantech here). As part of their lean transformation, both organizations have created standard work for managers (and executives) that brings them to the workplace on a regular and predictable basis. They're there in the trenches solving problems with the front line workers. Not surprisingly, both companies are doing exceptionally well -- they solve problems quickly and efficiently, and (as near as I can tell) they have high morale and levels of commitment.

Contrast these examples with that of Mattel under Jill Barad. During her three-year tenure as CEO, she was infamous for her insularity: forget about dining in the executive lunchroom -- incredibly, she even refused to ride in the company's elevators with any worker except for her phalynx of bodyguards. That kind of insularity couldn't have helped teamwork or morale, and it surely didn't help corporate performance: the company's stock price dropped 55% under her leadership. Surely her elevator habits weren't a root cause of the company's decline, but as a symbol of her approach towards leadership, it's revealing.

In his Open Forum post, Matt May talks about how much importance Toyota placed on increasing proximity as a way to improve performance:

When I was engaged with Toyota a few years ago, I learned the importance of creating an obeya room. Obeya in Japanese simply means “big room.” An obeya room was the nerve center for any Toyota team project—part war room, part command central, part safe haven where constructive critique, questions and comments can be posted without fear of repercussion. During the 1990s, then-President Fujio Cho became concerned with the decline in workplace collaboration due to the rise of e-mail and videoconferencing. In other words, people weren’t clicking as much as he wanted them to. Cho required teams to once again work face to face in obeya, as it provided a designated forum for surfacing and solving problems.

So this is another, more subtle, benefit of lean -- it actually promotes clicking between and within levels of an organization. Whether you're talking about PDCA cycles, A3 problem solving, manager standard work, or obeyas, lean brings people together.

Bob Emiliani Book Contest

Superfactory readers will no doubt be familiar with our good friend Bob Emiliani, who has authored numerous monthly newsletter articles over the years. He is running a contest in which you can win a signed set of his books, a $195 value. Go here for details on how to enter to win the books. Just write up to 150 words telling him why you want the books and what you hope to do with what learn from them (eligible only to persons living in the continental United States and with a US postal address). Bob's books are really insightful works, full of creative and original Lean thinking, which I'm sure you will find very helpful in your Lean efforts. Good luck!

The PDCA Performance Review

by Dan Markovitz

I don't have the patience, energy, or time to read most business books. Too much post-hoc analysis that falls prey to the halo effect (Wikipedia definition here, and recent bestselling book here), too many self-evident, common-sense ideas masquerading as trenchant insight. So I can't comment on the value of the new book by Gary Cohen, Just Ask Leadership: Why Great Managers Always Ask the Right Questions, because I haven't read it. But I have read an excerpt of chapter two (thanks Booz & Co.!), which is enough to see that at least when it comes to the dreaded annual performance review, PDCA can play an important part.

First, Cohen advocates monthly reviews. This makes a lot of sense, of course. It levels the load of work on the reviewer. It also allows for behavioral corrections close to the time there are problems rather than months later, when the employee can't remember what happened, and the problems have trickled throughout the organization.

Cohen also recommends replacing the unfocused, wandering conversation that usually passes for a review with, well, standard work. The day before the meeting, the employee brings you a list of five or six key objectives, detailing her progress on each one.  Then, the three essential questions to ask during the meeting:

• How well did you meet the objectives we mutually agreed on?
• Choose one of the following:
  
  • If you’re ahead, how did you get ahead?
  • If you’re behind, how did you get behind?
  • If you’re on target, is there anything I need to know?
    
    1. If yes, discuss further.
    2. If no, extol the virtues of coming in on target.
    3. If you’re not meeting your objectives, what’s the root cause?

And like a good partner in an A3 analysis, the supervisor becomes a coach:

If you can accept her explanation of the “root cause,” you allow it to be the actual root cause. If you can’t accept this explanation, you become her coach, helping her better understand the situation.

Don’t provide solutions; the employee needs to do this. If you tell rather than ask, you will not have accountable employees. Be patient. Having employees solve their own problems is the key to building their accountability.

Once the employee has a solution, the manager creates an action plan with deadlines, and sets a follow up meeting. Depending on the skill level (and attitude) of the employee, the subsequent meetings can be weekly or monthly.

Make no mistake: this isn't a book about lean. And some of the language -- even in the short excerpt linked to above -- grates. But it does demonstrate the power and applicability of lean management ideas in all environments.

May 19th: A Day of Elegance

Today two business books are being released.  One will already get a lot of coverage, but in my opinion the other is far more important and dare I say interesting.

Lean colleague and friend Matthew May's latest book, In Pursuit of Elegance: Why the Best Ideas Have Something Missing is now available.

I've long been a fan of simplicity and elegance, and the value those concepts can create.  There are obvious - or perhaps not - consequences for the manufacturing and business world, but also at home.  My wife and I have been actively getting rid of the nonessentials to lead a simpler and less chaotic life.  I was lucky enough to receive an advance copy of the book for review and can highly recommend it to anyone interested in creating simplicity and elegance in their work and personal worlds.

From some of the initial reviews:

From the Publisher

What made The Sopranos finale one of the most talked about events in television history?
Why is Sudoku so addictive and the iPhone so irresistible?
What do Jackson Pollock and Lance Armstrong have in common with theoretical physicists and Buddhist monks?

Elegance.

In this thought-provoking exploration of why certain events, products, and people capture our attention and imagination, Matthew E. May examines the elusive element behind so many innovative breakthroughs in fields ranging from physics and marketing to design and popular culture. Combining unusual simplicity and surprising power, elegance is characterized by four key elements: symmetry, seduction, subtraction, and sustainability. In a compelling story-driven narrative that sheds light on the need for elegance in design, engineering, art, urban planning, sports, and work, May offers surprising evidence that what's "not there" often trumps what is.

In the bestselling tradition of The Tipping Point, Made to Stick, and The Black Swan, IN PURSUIT OF ELEGANCE will change the way you think about the world.

Advance Praise for In Pursuit of Elegance

"In Pursuit of Elegance is a fascinating intellectual romp that will change the way you look at your surroundings. As he takes readers from Jackson Pollock paintings to Dutch intersections to the secret menu at In-N-Out Burger, Matt May reveals the hidden elements beneath genuine innovation. This book is surprising, compelling, and, yes, extremely elegant."
Daniel H. Pink
author of A WHOLE NEW MIND and THE ADVENTURES OF JOHNNY BUNKO

“Elegantly written as it is provocative, In Pursuit of Elegance makes a convincing—nay, worldview-shifting—argument that less is best.”
Ori Brafman
co-author of Sway

“Enlightening. Makes a compelling case for doing more with less, by optimizing the expenditure of one’s assets and resources. That’s something anyone can and should put into practice.”
Kevin Hunter
President, Toyota Design Network

“What a masterpiece! The definitive guide to the ‘less is more’ mindset. I meant to only take a quick glance at In Pursuit of Elegance, but once I started reading it, I couldn’t stop. In a world where everything keeps getting more complicated and overwhelming, Matthew May shows us that if we start looking for things to take out, things to stop doing, and intelligent short-cuts, we will all be happier, do superior work, and live in a better world.”
Robert Sutton
Professor, Stanford University, author of The No Asshole Rule

“One of the more unique business titles in recent months…In Pursuit of Elegance is very entertaining when it comes to May's presentation of his thesis. His narrative grabs the reader's attention from the outset and, regardless of the complexity of his examples, he manages to hold one's attention by delivering astute observations on elegance.”
Soundview Executive Summaries

Are Employees Really Your Most Important Asset?

"Employees are our most important asset."

How many company value/vision/mission statements include that?  I would guess over 90%... of the companies that actually have such statements.  How many really, truly, believe it... and of those how many actually account for their employees as an asset on the books?  A handful at most.

Co-blogger Bill Waddell's new book, Rebirth of American Industry, has a few themes that require re-reading to grasp completely... at least for people like me.  This past weekend I spent some time exploring his "valuation of people" concept, and found that it tied directly to situations all manufacturers face.  I apologize to Bill for quoting more than a few passages from his book, but he says it better than I ever could.

Most manufacturers operate under the Sloan/Dupont/Brown accounting method that considers manufacturing employees to be variable costs, to be hired and fired in a direct correlation to even small changes in production schedule.  Think about that for a minute. 

"A new accountant can be hired and pretty much as effective as he or she is going to get within a month or two.  A production employee is more likely to take six months or more.  Yet the accountant is a fixed expense with a fair amount of job security while the production worker is a commodity."

"Only in the world of F.W. Taylor, Pierre DuPont, Alfred Sloan, and Donaldson Brown can kicking trained, experienced, capable people out of company be seen as a positive move."

How many of us, especially those of us in the high tech manufacturing industries, have grimaced when our "headcount" was decreased due to a temporary change in sales?  What was the true value of those people to the company? 

"Those variable cost people - the ones Taichi Ohno points out are not even whole people in American cost accounting - are not people at all.  They are headcount.  That simple fact makes lean manufacturing virtually impossible at Sloan companies."

Bill reinforces his point by making a comparison to a different industry:

"Imagine Google, Yahoo, or Microsoft declaring that computer science is a commodity - basically any warm body from a local temp agency can do it - and that the key to success in running these technology companies is not technology, but finance and marketing.  Imagine further that they all but declare war on their programmers and system design folks, classifying them as variable costs and devising a management system aimed at cutting their numbers and minimizing their pay."

Traditional accounting methods do not account for the true value of production employees.  Capitalizing training is one method to get some of it officially on the books, especially if it is by person and the company has to take a write-off when the person leaves... which helps tell the investor about the true impact.

Taichi Ohno explained very clearly that the continuous improvement of labor efficiency at Toyota results in cost reduction and excess capacity.  The profit from lean manufacturing with a stable workforce arises from freeing up people, then using them to sell more.  This is contrary to the Sloan company view.  The sales forecast is based on the most marketing believes they can get at the planned price.  Any people freed up along the way will be laid off, resulting in lower costs for the planned volume.

Lean manufacturing depends on people.  Experienced, trained people that are focused on removing waste from processes.  This experience and training has considerable value far exceeding the hourly cost reflected by traditional accounting. 

"Just about every company says they want their employees to work smarter, not harder.  Few of them understand that people cannot and will not work smarter when they have supervisors hovering over them dictating and measuring their every move.  They especially will not work harder or smarter if management has defined the ultimate goal to be a lights out factory and they soar like hawks over the plant hunting for jobs to eliminate and people to lay off.  People everywhere will work smarter and harder for the customer.  They will not work harder for someone who has defined them as a variable cost."

Creating a lean manufacturing environment is tough.  Very tough.  There are a lot of hurdles with training, commitment, new tools, and especially traditional accounting systems.  We are asking a lot of our employees, especially initially before the full value of lean begins to hit the bottom line.  We are in effect asking them to help us streamline and remove waste from processes, which they know puts them at considerable job risk.  Far more risk than the manager, or accountant, experiences. 

"All employees ask is that management make the same sort of commitment to them as they have been asked to make for the company."

"If the company is willing to risk the possibility that there may be times when profits suffer due to an excess of people, they can anticipate an enormous return when those people commit to driving lean, high-quality manufacturing through the plant."

Think about that the next time you are considering ways to cut costs in the face of short- or medium-term reductions in sales.  Especially think about it if you are trying to reduce wage creep or reduce product cost in a stable (let alone growing) business.  The value of trained, experienced employees far exceeds their hourly cost, and the impact of those people leaving (and your best and most employable employees are always the first to leave) far exceeds the savings of layoffs or wage freezes or cuts.  The culture where employees cannot count on management to provide stable employment with opportunities for growth is a culture where lean cannot succeed.  The cost of the waste associated with inefficient processes, which you will need experienced employees to identify and rectify, far exceeds the cost of those employees.

Support, nuture, and then leverage the power of your most important asset, your employees.

A New Must-Read Book - From Our Own Bill Waddell

Over the past several months you've probably enjoyed Bill Waddell's hard-hitting posts on this blog as much as I have.  His propensity to challenge the status quo with historical facts has been a breath of fresh air and has forced the lean community to think about the stability of its own foundation.

Bill, in collaboration with Shingo Prize winning author Norman Bodek, has just released a new book, Rebirth of American Industry - A Study of Lean Management.  In it he uses his in-your-face style to take issue with several commonly-held lean beliefs, and the companies that mistakenly believe they are lean.  The book has already received considerably acclaim from early reviewers. 

Brian Maskell, President of BMA, Inc. and one of the leaders of the lean accounting movement, has this to say:

"This excellent book will make some enemies.  It is outspoken, hard-hitting, and correct.  The authors answer the question "whay have so few American companies successfully transformed themselves into lean organizations".  They take us back to the origins of lean at Ford Motor Company and Toyota, and contrast them with the modern American manufacturer.  The solutions advocated will be unpopular because they cut to the heart of "professional" management theory and show that the lean transformation must start not on the shop-floor but by active transformation in the executive offices."

Tom Johnson, author of Relevance Lost and the Shingo Prize winning Profit Beyond Measure, had this to say in the forward he wrote for the book:

"The central concern of this book is to outline the core principles in the Sloan management model that GM adopted after 1920 and to show how adhering to those principles makes it virtually impossible for managers to understand and adopt the principles inherent in Toyota's so-called "lean" operating system.  The book also does well at showing how the "magic" of MRP software after 1960 further disguised the dead-weight impact of overhead cost.  The authors properly describe MRP as a sophisticated effort to rationalize the damage to sound operations caused by following the Sloan model.  "

I have always been fascinated by the history of lean, and this book does not disappoint.  However as Bill points out in his introduction, this is not a history book... it is a management book.  In any case, the supporting stories are priceless and help drive home the fallacies of the Sloan/Dupont ROI model.   Such as Chrysler having 400,000 cars in finished goods at one point which required them to rent the empty Ford plant at Highland Park - ironically the birthplace of lean manufacturing - and they still believed they achieved a profit.  As he has on this blog, he takes the Shingo Prize to task for awarding prizes to operations like Delphi that ended up failing the bottom line gut test of lean: they didn't make money.

One of my favorite chapters is "The Illusion of MRP", perhaps because that's the battle I've fought at several operations.  After a quick review of the history of MRP, Bill discusses the attempts to integrate lean with MRP... and correctly concludes that the only way to reconcile lean and MRP is to turn MRP off.  Looking at it from Taichi Ohno's perspective, would a manufacturing company that was operating on a philosophy of lead times of zero and lot sizes of one have any use whatsoever for an MRP system?

I highly recommend this book.  It will be available this week from Amazon.  You can read an excerpt here, and it is also featured this month on Superfactory and in the Superfactory Newsletter.  My thanks to Bill and Norm for sending me a preview copy.

Mass Customization for a Customer of One

We previously introduced you to Fab, the book on personal fabrication by Neil Gershenfeld.  The following is a longer review by your editor, which will soon appear in a national publication.

Manufacturing may never be the same again. Imagine a shepherd in Norway manufacturing radio tracking devices for his flock, farmers in a remote part of India manufacturing specialized electromechanical tuning devices for their tractors, or even actor Alan Alda designing and building an accessory for his camera. Science fiction? Actually those examples are happening today, with other “fabrication labs” in operation around the world in places like Ghana, Costa Rica, and Boston.

Neil Gershenfeld, the director of MIT’s Center for Bit and Atoms, explains this fantastic-sounding frontier of technology in Fab. What if you could someday put the manufacturing power of an automobile plant on your desktop? Such a “personal fabricator” may sound far-fetched, but thirty years ago, the notion of “personal computers” in every home sounded far-fetched. Give people personal computers and they can write their own software. Give them devices called personal fabricators and they can make their own things.

The idea for fab labs was sparked by a course called "How to Make (almost) Anything" at MIT's Center for Bits & Atoms. Gershenfeld saw the class as a how-to exercise for engineering students where hey would get to experiment with Center’s cluster of machinery and tools. The first class was held in 1998, and over 100 students showed up for a class that could hold only 10. Even more surprising was the fact that the class list including a wide variety of non-engineering majors, from architects to even aspiring artists. "They were motivated by the desire to make things they'd always wanted but that didn't exist." By the end of the class "they routinely and single-handedly managed to design and build complete functioning systems” using the laser cutters, water-jet cutters, numerically controlled milling machines and other CAD-CAM tools. Manufacturing companies use this equipment to make prototypes of items they intend to manufacture. In Gershenfeld’s fab labs, the prototype is the product. Each is designed for a customer base of one.

Starting in 2002, Gershenfeld began tapping the National Science Foundation for funds to deploy fab labs around the world. In addition to the examples mentioned earlier, engineers at Takoradi Technical Institute are working on a solar-energy project that will bring electricity to villages in Ghana. Using the machines in one of these labs, children in inner-city Boston have made saleable jewelry from scrap material. Villagers in India used their lab to develop devices for monitoring food safety and inexpensive electronic gauges farmers can use to measure the quality of their crops. And students at MIT have made everything from a defensive dress that protects its wearer to an alarm clock that requires an exercise in mental clarity before it can be shut off.

Gershenfeld believes that fabrication tools are developing along a path very similar to the one taken by computers. Computers were once large, expensive, complicated machines accessible only to a chosen few. Now they have evolved to the point that almost everyone can make use of them to some degree. Machine tools are still at a relatively early stage of evolution but that is changing rapidly. What happens when such machines, or even future versions which can manipulate atoms and molecules, are as accessible as computers are today? Personal fabricators are about to revolutionize the world just as personal computers did a generation ago. Today, one of these fab labs costs about $20,000 but Gershenfeld predicts that fab lab prices will follow the path of PCs. With volume production, these advanced do-it-yourself systems could plunge to $10,000 and then perhaps to $1,000.

This will mark a return to the days before "art became separated from artisans and mass manufacturing turned individuals from creators to consumers." Gershenfeld further notes, "With a personal fabricator, instead of shopping for and ordering a product, you could download or develop its description, supplying the fabricator with designs and raw materials." A fab lab in every home could have a dramatic effect on today's throwaway culture. When a homemade appliance or toy breaks, the fab would know how to disassemble it and either rebuild it or recycle the materials. It could even open the door to being able to email an actual product, with the recipient’s personal fab creating the physical product.

The concept isn't limited to small consumer products. Gershenfeld describes efforts under way to develop large, mobile printers that squirt concrete for "printing" a building or bridge. Larry Sass, an MIT professor of architecture, is developing a fab-lab system for constructing simple but customized houses from a truckload of plywood panels costing roughly $2,000. Gershenfeld even has plans to offer fab labs that can reproduce themselves again and again.

Gershenfeld offers some concluding thoughts on potential ethical issues with fabs. What would happen if the ability to make almost anything fell into the wrong hands? What is the implication for humanity with machines that can replicate themselves? The author responds to such fears with examples of how new and potentially destructive technology is eventually matched with a limiting technology, and how countermeasures generally coevolve with dangerous technologies.

If personal fabrication technology really follows the path of the personal computer, manufacturing as we know it is in for a radical paradigm change. Mass customization for a customer of one… in some respects this is an ultimate form of lean manufacturing. Only a few generations ago sending spacecraft to space and landing on the moon were laughable concepts too… until they happened.

The Gold Mine - A New Novel About Lean Manufacturing

Just in time for summer, the Lean Enterprise Institute has published The Gold Mine by Freddy and Michael Balle, an excellent novel on executing a lean manufacturing turnaround.  Here's a great way to relax on the beach with an entertaining book while also getting some great ideas on how to improve your operations... without having to slog through yet another mind-numbing business best seller.  Coming from the organization spawned by Womack and Jones (the authors of the definitive text on Lean, Lean Thinking), we had great expectations for this book.

Goldratt's The Goal has been required reading for many years.  It provides a good introduction to theory of constraints, also in the format of an entertaining novel.  However it falls a little short on explaining how to implement the concept in the real world. 

The Gold Mine goes several steps further.  The novel begins with a real-life business situation that many of us have experienced... strong sales, a backlog, great products... but still a cash flow problem.   By using all of the core Lean tools such as 5S, kanban, pull, heijunka, jidoka, value stream mapping, and kaizen, the novel's characters turn the business around.  Real life roadblocks are encountered, and the implementation of each concept is detailed.

Perhaps the most valuable insight is with the people side of Lean... something that many lean implementations forget about.  The novel spends quite a bit of time on the emotional and leadership growth of the characters, and how they inspired their team to greatness.  As Jim Womack says, "Mastery of the technical details of lean thinking is never enough.  A transformation will fail without the most important element: the engagement of the people doing the work."

After reading this novel you may want to escape the beach and get back to work!

Freakonomics - The Strange Side of Economic Analysis

This is a little off-topic from our usual discussion of manufacturing excellence, but I just read an excellent book on the bizarre side of economic analysis.  Freakonomics, by Steven Levitt, focuses on how economic factors can affect even the most intimate parts of our lives. 

Some of the topics analyzed include the organizational structure of drug gangs (surprisingly similar to that of McDonalds), baby-naming patterns, swimming pool safety, and police effectiveness. 

Probably his most controversial assertion is that the Roe v. Wade decision legalizing abortion led to the significant reduction in crime rates we've seen two decades later.  The presumption is that the abortions pre-empted the existence of some people who would have been born into a life of poverty and hardship, which can be the precursor of a life of crime. 

Perhaps a stretch, but that along with the other examples really makes you think about the interdependencies within the world we live in.  And more importantly, how the decisions we make can create unexpected effects.