Monday, September 24, 2012

Can Lean and Corporate Governance Play Together?

We’re going to go deep behind Executive Lines this week so don’t get left behind.  There is quite a bit of regulation out there telling companies how to act, walk, talk, eat, etc, etc, and if you want to raise some capital by selling shares of you company on the market you will have much more to deal with.  I will not be providing any opinions on the Sarbanes-Oxley Act, but over the last 30 years Corporate Governance has received plenty of attention especially after Enron, Worldcom, and other situations.

What is corporate governance?

Let’s start with a definition on Corporate Governance.  Simply, it is the system by which companies are directed and controlled, (Wikipedia, SEP 2012).   It attempts to define the interactions between Board of Director members, management, and shareholders.   You could add stakeholders to this list also based on the amount of airplay companies receive.  But let’s focus on the basic definition words “system”, and “directed and controlled”.

Much of this addresses the communication path through management, the board, and shareholders.  We can see this in the shareholder reports, and on financial websites with the company’s balance sheet, income statement, and statement of cash flow.  Inside the company the communication the board and management uses should be  a little more action oriented.  When I say communication, I mean the metrics.

How good is the company’s delivery? 
Oh, it’s good. 
How good? 
Real good.

Sound familiar in the office area?  Does anyone really know?  When the strategic plan is built, there should be some recognition of measurable performance goals.  If you don’t know, go ask your customer what is important about the delivery of your product.  Oh, it needs to be good.  How good?  Real good.

What is a Lean System?

Let’s go back to this system.  When we talk about a Lean System, we are talking about making our office products at the rate or pull of customer demand.  Do we have this thinking in our systems?  Yes, that does mean to put Just-In-Time methods in our order systems.  Remember, JIT is not just about reducing inventory costs, it puts a glaring spotlight on the problem areas.  The same areas where we improve the flow of our information products.

Align the Lean System with the Strategic plan and we begin to provide actionable metrics going to the board and management, and in the right hands of a visionary Leader this can produce transformation that strengthens the company and produces happy customer.  How happy?  Real happy!

The measures going to management should show how we are affecting the results.  These could show that performance is better, worse, or remained the same.  If the results have not changed, then the team has not found the root causes, or the improvements are not working and we will hold off the pizza party until we have sustained positive results.

Can we institutionalize continuous improvement?

Improvement can be institutionalized by creating the expectation, and required metrics to review, and growing the people who show aptitude for Leadership out of the ranks of Green Belts and Black belts.  I did not say that all Leaders should be belts, but there is a good place to look.  Leaders should have their performance measured and Executives do not have a “come-apart” the first time a chart is Red or Yellow.  These are indicators of process performance issues that need to be addressed.

ISO and CMMI provide frameworks of systems, but these are dependent on people working within the boundaries and keeping the documentation current.  Companies and teams still develop their own methods and processes and these should be measured and reported upon.  If you are not going to manage the process, then don’t measure it.  And don’t be surprised if you do not receive the performance you think that you are entitled to receive.

As we go through this journey, we should be using road signs and maps to help us see where we are.  Working with Leadership and our employees will strengthen the relationships and improve morale.  Doing the right things at the right time should result in satisfied customers.

Have you seen a successful transition of practices when Leadership has changed hands?

Monday, September 17, 2012

Future State Value Stream Mapping

Standing in the office, staring at the wall with your Current State Value Stream Map (VSM) pinned up, you may be thinking that someone needs to hide this thing before the boss walks in.  The communication lines look like one of those sketti-maps, and the work balance chart is normally distributed.  Take a breath and remember that this is a journey, don't stop believin'.

Remember the Normal Distribution?

Time for some calm and rational thinking, what did the Lean Policy Deployment matrix indicate that was the highest priority for the team?  You can see the operational targets and how they relate to what is important, but what does this mean for our processes?  Now we are connecting the dots between where we are now and where we need to be moving toward.  Do we have the measurements in place to help us see where we are?  If not there needs to be a line drawn in the sand for our baseline or starting point.

Take the goals from the Lean Policy Deployment matrix and any yearly "goals & objectives" given to the team, and connect them to your Current State VSM.  What picture emerges?  Does this flatten your work balance chart?  If you find that your goals do not change your VSM, you may have weak or ineffective goals.

Now is the chance to talk with the team.  Get their opinion on the obvious problems pointed out on the map.  What problems do they see on a recurring basis?  What opportunities do they see?  This is a great way to empower and engage the team.  They want to be listened to, they want to know that their input is valuable and that they are not just button pushers making documents go somewhere.
Our VSM friend, the Starburst!

Armed with this data, you have something to talk about with the boss.  Show them where you think the problems exists, show the data, and then show them the starbursts that you and the team created.  Give some credit for the creativity of the team!  Talk about where you think you could improve performance and customer satisfaction.  The boss may provide some more goals to think about for transforming to a Lean flow.

Take the starbursts and place them on a Benefit/Effort matrix and now you and the boss have something to work with to prioritize the improvement activities for the coming year.  Below could be your new best friend for prioritizing opportunities, the PICK Chart.  Decisions made from this matrix will need to be balanced against the Lean Policy Deployment matrix.  Think about what is important to improve and what is attainable. 
PICK Chart
If this is your first time to attempt to formally improve your processes, take the top one or two prioritized opportunities and compare their goals to the Current State Value Stream Map.  What impact will these make to the 4P's or to Safety, Quality, Cost, and Delivery?  These opportunities may enable other improvements, like communication flow or decision making processes.  Don't let the fear of making Quality improvements impact what is executed first.

Now we bring in our tried and true project management skills and abilities.  Write a problem statement without any assumption of root causes, define SMART goals, and determine deliverables.  Document the project on a one-page A3, there is no need for a 125 slide project briefing.  There is nothing brief about 125 slides, seriously, knock it off!  Put the smart people in a room, find the "Belt" person you have heard about and start exploring what is going on with the process.

Share what you have learned with the work team as you go through the project determining root causes and deciding what your going to do about it.  Create some metrics and a desk guide to keep you from backsliding to the old, comfortable, chaotic process.  You are responsible for the team's results, own it!  When the process is fixed, celebrate the success with the team.

In 12 months you're going to go through this again.  Make sure you have your stuff in order.

Is change hard?  Yes, but so is coming into work everyday knowing that poor performance is making an impact to the team's moral and no one cares to make it better.

Have you seen VSM be successfully used as a strategic planning tool or ever been involved in a VSM "Event"?

Monday, September 10, 2012

Current State Value Stream Mapping

Transformation has many requirements, two of those are knowing where we are and where we are going.  This week we will address how to see where we are using Rother and Shook's "Learning to See" method of Value Stream Mapping.  If you want to learn more about your process, this is a perfect way to do it. 

First the rules (oh, no!  not more rules), Value Stream Maps are based on products.  Don't get hung up on thinking about factories, we all make something.  Gears, cars, hot dogs, lawn chairs, pizzas, newspapers, lumber, stock analysis, laptops, contract statements of work, testing instructions, decisions what to spend resources upon, etc, etc, etc; get it?  We all produce something that is passed on to the next internal customer or our final external customer.

Our Current State map

Here is our example Current State Value Stream Map.  Current state means how the product flows as of today.  Again, how the product ACTUALLY flows, not what your ISO documentation says, or how you wish it would flow, but the no-kiddin' real way it flows right now.  If you don't know, go ask the actual people doing the actual work, in fact I recommend you go find out who those people are right now.  Go ahead, I'll wait...

As you can see in the picture the inputs from suppliers are on the left and the output going to the customer is on the right.  The product going through the flow is on the lower half of the map and the information supporting the flow is on the upper half of the map.  Under the transformational activity boxes is where we will store some important metrics like cycle time, touch time, quality yield.  And last, but certainly not least, the time line along the bottom which we will use for part of our value analysis.

Did I say last?  Two more things, identify the product/process and put today's date on the map!  This is really important as you begin to start constructing these high level maps.  One day in the far future you will find a stack of maps and wonder which ones need to be trashed and you will not have a time reference.  Yes I said trashed, we are not cartographers.

There are several things we can read from this map.  Check out the balanced work chart in the lower left corner.  If you are in love with TOC, you should be able to identify where the bottleneck is located.  The Value Added calculation is based on the amount of work in the system in hours and the cycle time of each activity.  The amount of work is based on the calculation of the number of items in the flow and the cycle time for one.

WIP (the number of items in the flow) is an important measure because it represents labor costs and material costs.  Add them together and you know how much money you have tied up.  If you could reduce your WIP costs, what else could you do with that money?  Expand your capital, update your old computers, hire another sales person?  Is the communication flow adequate?  If you are only talking to the last person in the flow then you may not be seeing how the other sections in the product flow are performing.

These maps help to see where to attack first, where is the longest cycle time, lowest quality yield, or longest touch time?  If you have a Belt in your organization, get their help analyzing what is going on with the performance.  While we are asking uncomfortable questions, when was the last time you were on the floor?

So next week we will explore the construction and use of the Future Vision map that will contain the 5-year plan.

What has been your A-Ha! moments constructing your Current State maps?  Does it make you want to start implementing solutions?

Monday, September 3, 2012

Lean Policy Deployment

Aligning tactics to strategy

Welcome to September!  Guess what it is time for now?  That's right, this year's goals and objectives for the company.  How are we doing this year so far?  Did you set sales, safety, delivery, or financial goals?  Did you build that new capability you wanted?  Are your teams progressing in maturity?

These are worthy and usual safe things to chase, but are they the right things for your company or teams?  You will also find that you may have a team or site that is the benchmark for the company.  Translating your vision into the strategy is up to you and your board of directors, and determining how to advance to that vision will be executed by management and the teams.  Each team member is aware of their strengths and weaknesses, and this tool can help them grow into that type of person they want to be.

How to build
  1. Identify the key issues in the organization's customer focused performance.  These may come from a Value Stream Mapping Event or a strategic offsite meeting.
  2. Determine measurable business objectives that address these performance issues.  You are not boiling the ocean, and they do not say "do stuff better".  A good tool to use here would be a Balanced Scorecard.
  3. Define or Refine the overall vision and goals.  Goals will be listed under Target Operational Results.
  4. Develop supporting strategies for pursuing the goals.  These will be listed next to the Objectives.
  5. Determine the tactics (or projects) and targets that facilitate each strategy.  List tactics above Selected Projects and targets next to Improvement Targets.  
  6. Decide the strength of alignment within the matrixed entries on the map.
  7. Implement performance measures for every business process.  If it is worth doing, it is worth measuring and doing right.  Yes measuring is hard, but so is laying people off because you did not work on the things that were important.
  8. Measure business processes during execution.  Do not wait until the end of the year to see if you hit any targets.

How to measure

And now we are off and running!  We are delivering sales orders, reports, and briefings.  The team is collecting data and we are compiling it into something that tells the real story.  Whether we are using a fully automated workflow tool with performance reporting, or collecting information on a form and typing it in a spreadsheet, we need to make sure we share it with the team.

Don't try to create excuses if the information is not great, we are smart enough to see through management's smoke screens.  This is the perfect opportunity to use some A3 Problem Solving.  Use the results to strengthen your system and processes, and celebrate your successes once in a while.

What results have you seen with your improvement planning?