DailyKaizen

Over the last year I often get frustrated by the pace of change.  I am one that quickly jumps to action, loves the thrill of change and as a result am often accused of being inpatient.  Which is probably pretty accurate.  One area where this gets me in trouble is with the learning process or more specifically the teaching process.  My action orientation often means I forget to slow down and spend the time with the people I am suppose to be helping to teach.  Instead I give them the answers and sacrifice the long-term sustainability for the short-term progress.   Realizing this challenge I have been working hard this year to spend more time asking questions and learning how to balance the needs for results with the learning process.

From an organizational perspective I have also found myself frustrated with the amount of effort we are investing in Lean focused education.  We have gotten far better with our learning methods.  We have move away from the classroom and have integrated our learning into the work activities, but even so I often have to stop and remind myself of the importance of this work.  I realize the need for this education, but it is so very hard for me to slow down and wait for others to come along.  My Sensei often reminds me that to get different results you need different thinking, thus for this to happen learning must take place. 

What has been really exciting is on a broad scale, for the first time, I am starting to see the fruits of all of the investment we have made in Lean related education.  We have focused on teaching the top 120 leaders in the organization the basic Lean competencies through action learning.  We formed cross-functional teams that have mapped core processes, develop visual systems, etc.  At the same time the executive team has made a significant commitment (12 days in a year) toward learning point, cross-functional and system kaizen.  Slowly, over time I have seen this learning begin to change thinking.  Leaders are starting to think process.  They are asking to see process data as opposed to just results data.  They are learning about functions outside of their own.  There is a common language of improvement beginning to take form.  The conversations have changed.  The thinking has definitely started to change and hopefully next the results. 

A couple of weeks ago I had the opportunity to spend some time listening to phone calls in our customer service center in preparation for an upcoming improvement event.  For those of you that don’t have jobs that regularly put you in contact with your customers I highly recommend making the time to do the same.  It is amazing how much you can learn in a short period of time by spending time listening to the voice of the customer.  What is just as amazing is how much you can learn from talking to the people who spend forty hours a week listening to the customer.  They really have an amazing insight into where the problems are and what the customer needs us to do better. 

I spent some time listening to calls with a representative that had been with the organization for more then ten years.  After watching her work I was blown away by how efficiently and effectively she navigated the complexity of our organization in service of our customers.  The products and processes are so complex and the skill she had to take this complexity and simplify it in service of our customers was impressive.   She commented often how each year things seem to get more complex.  After hearing a dozen or so calls it was very clear to me that she was right and we need to follow the same path that our friends in manufacturing have walked before us.  Once processes are brought under control it is time to work upstream and simplify the design of the product and the process. 

Between taking calls I asked her if she thought things were changing for the better or for the worse.  She was quick to state that she thought things were changing for the better.  That Lean had allowed them for the first time to have an outlet for their ideas and a set of tools to make improvements.  She then told me about how applying standard work to how they answer calls had been a huge win for the both organization and the customer.  It was exciting to hear her enthusiasm for the improvement.   I could not help but think how powerful it will be when we learn to apply Lean principles, methods and thinking that she had learned to our product development process so that her job is not so difficult in the future. 

As an organization we are still living with a slight hangover from our long history of Management by Objective (MBO).  One of the areas that this is most visible is in the mental models that we still all hold about how to bring about improvement.   This is a subject I have often brought up in the past so you can tell it is one that on a daily basis I see the organization struggling with.  I decided to write about it again this week after having conversations with several of my team members who are trying to teach leaders how to break out of the mentality that “all improvement is done in projects and most improvement is led by project managers.”

One does not need to look very hard to make this challenge visible.  One glance at our strategic plan and you can see numerous projects underway within the organization.  Most of these projects are point interventions where a small group of people have identified where a process or system needs to be added or changed and now they are working hard through change management issues to get these changes adopted by the operating units.  As you can imagine this creates all sorts of challenges including:

• Difficulty identifying cause and effect.  By taking a project as opposed to process improvement approach it is very hard to make performance visible and understand the effect improvement interventions are having or will have.
• Projects are typically point improvements that can often lead to sub-optimization, because we do not understand the impact the change will have on the entire process.
• Projects have a start and end date while the processs is always there.  Teams that get accustomed to improvement through projects often view improvement as an “addition to the job” as opposed to teams that are focused on process and the improvement of the process on a continious basis. 
• Projects are typically managed and implemented by people outside of the areas that are impacted.  This means that often there is strong resistance and little ownership for long-term sustainability and improvement.   This is a dangerous challenge for an organization, because it creates a system where only a small group of specialist are responsible for improvement.  Everyone else needs to do their job.

I am sure many of you can add additional bullets to this list.  As we move forward with and organization and teach people how to see their processes it will be important that we move away from these mental models.  This will be a long-term change…

I spent some time today debated if I would write this posting, because I have lot of energy right now around the subject matter due to an experience my family is going through as I write to you today.  I started this posting a couple of times and then walked away from the computer for a while.  So I will start with a story to provide some context.  A family member of mine recently had surgery at a very well respected hospital on the East Coast.  A couple of weeks after the surgery he developed some complications and was rushed back the hospital.  He appeared in the emergency room on a very busy, and chaotic Friday night and after waiting for quite some time was finally admitted and treatment began.   After his initial treatment there was some additional complications and in the chaos of the situation there were several missed communications between clinicians.  Additionally, the proper treatment path was not followed even though it would be considered “evidence based.”  Luckily, the mistakes were realized when one of my other relatives that happens to be a physician intervened from afar and things seem to have stabilized.  Afterwards it was very clear that if the processes were standardized and the standards were followed it would have been simple to have avoided the mistakes.  But caught up in the chaotic environment with no clear processes to follow it was easy to make very preventable mistakes.  Throughout this experience my family was taken care of by incredible nurses, physicians and other care takers.   Great people that were trying to work in a broken system.

I often find myself debating with people within my industry whether standard work can be applied to patient care.  I often hear back that it does not apply because ”no two patients are the same” or “healthcare is far too complex for standard work” to work.  This argument is frustrating and we need to find ways to put to rest. I am sure that every industry has heard the same exact argument about why standard processes can not be applied in their field.  I was telling my neighbor about what happened and he confirmed that in his industry (aerospace) twenty years ago it was the same story.  “Airplanes are far to complex to be built by standard processes.”

The healthcare industry needs to start to pay attention to what other industries have already figured out.  That the same reasons that we give as excuses on why processes cannot be standardized is the exact reason why we need to make them standard.  The more complex a process the more important it is to standardize in order to bring it under control and then understand where it can be simplified.  This also applies to the variation argument.  If there a high degree of variation in inputs it is essential that you standardize to understand how much variation really exists and then have a strategy to respond to it.  This is the only way to effectivly minimize the variation of outputs. 

Like in Aerospace we work with a product (patients) where the stakes are very high and mistakes can be very painful.  This is why I work in healthcare. 

We are not just shy of six months into our first year of our enterprise wide Lean journey and I am working with a small team to prepare for our mid-year review.  The purpose of the mid-year review is to step back and do a check/adjust against the content of our strategy A3 (Plan vs. Actual) as well as to conduct a check/adjust on the effectiveness of the management system we are working hard to put in place.   As a payoff, we hope to make adjustments to our strategies and the management system that will lead to improved business results as well as to begin to lay the ground work for the next iteration of strategy deployment that begins in the fall. 

 This preparation work I have been doing has given me an interesting opportunity to reflect on what we have done, on where we are, and where we still need to go.  Looking back in many ways it feels like things are going so slowly.  There is just so much we need to do better, faster and with less resources.  Yet,  as I think about where we were just a year ago and where we are now it puts things in perspective.  Just a year ago there was only a small group of leaders that were living and breathing Lean, and most of them were in the Model Line.  Now, everywhere I go in the organization I talk with leaders that are excited, and deeply immersed in Lean transformational efforts.  We are beginning to speak the same language and have a common view of both where we need to go and the means by which we need to get there.  With this critical mass forming, so also has formed a deeper understanding of what problems need to be solved in the near term to allow us to successfully navigate the next steps on our Lean journey.  

So back to the Mid-year review.  Because of the progress we have made over the last six months I predict some very interesting discussions and decisions that will need to be made as we begin to look forward to this fall when we begin our second cycle of strategy deployment.  First, our senior leadership team will need to wrestle with how we will begin to define and transform the organization around value streams.  For many years we have talked about the need to break down our organizations silos and for the first time I believe we are ready to take bold steps in that direction.  Second, our senior leadership is starting to move toward viewing operational excellence as the overall strategy of the organization.  This should have huge implications for our current strategies as well as the next round of strategies for 2009.  Lastly, our senior leadership team needs to figure out how to adjust the management system away from its current over-emphasis on our budgeting system for control.  Currently, our budgeting system drives waste and the wrong incentives and until it is changed we will be keep looking in the rear view mirror as opposed to whats coming towards us in the future.   

This week I had the chance to conduct a process walk in one of our large, transactional, administrative work areas.  A year ago I spent some time in the area, before they had begun to redesign their processes applying Lean.  Back then it was a really tough environment to work in.  Basically, it was row after row of high walled cubicles, hardly any light an almost invisible work flow.  As you would expect the associates working in this area worked fairly independently and most were very specialized to maximize individual productivity.  It was not a very easy place to work. 

Returning this week I was blown away by how different not only the work environment had become, but also how much more engaged the associates seemed.  While many process changes had been made the largest difference was in the work environment itself.  All of the tall cubicles had been taken down and teams were organized in eight to ten person workcells.  Each workcell had an open area in the middle and various visual systems tracking on the teams work flow.  Sitting in one corner I could watch the teams work as teams as opposed to sets of individuals.  Associates with problems would raise their hands and supervisors would go to them to help with problems.  Small groups were working together on solving problems.  All of this was completely impossible in the old work environment.

After the walk I spent some time reflecting with my boss who was on the walk with me.  Both of us had read many times in different Lean sources about how important it was to change the work environment during a Lean transformation.  We both had also seen before the positive impact a small change in a work environment can have for a team, but neither of us had seen this dramatic of a difference.  It was incredible to see just how much improvement can take place by removing the physical barriers that prevent people to work together toward common goals and problem solving.  I walked away thinking about just how much more their is to learn about Lean and the improvement that is possible. 

This last Friday we had the great opportunity to host Orry Fiume for a full day workshop focused on “Management Accounting for a Lean Business.”  For those of you that don’t know Orry, he is the former CFO of the Wiremold company, and one of the best known authorities on Lean Accounting.  Orry was part of a team that transformed the Wiremold company during the 1990s, which has been written about extensively in several books including Lean Thinking and Better Thinking, Better Results.  We asked Orry to come out and visit us after his new book Real Numbers was discovered and widely distributed within our organization and is being used especially by our Finance and Measurement teams to challenge how they think about their work. 

During the session we learned a lot about how to transform the purpose as well as processes of the Finance and Accounting functions to support an organization’s Lean strategy.  Orry did a great job of translating stories from the manufacturing industry into healthcare examples.  Overall, the timing could not have been better.  The CFO and the Finance teams are engaged and looking to take a leadership position in the transformational efforts and the tools and the thinking they learned should be put to good use.

While it was valuable to learn about the tools and methods of Lean accounting I found even greater value in the messages about leadership that Orry brought to the workshop. The primary message that Orry reinforced throughout the day was that in order to transform a company you must first transform the people working in the company, one person at a time.  This is not a challenge that can be overcome with a new method or tool.  It is a challenge that can only be overcome by leadership.   At the end of the day I wrote out in my notebook the key leadership messages that I took away from the day and are shared below: 

• Leadership from all functions and most importantly at the highest levels must “plunge” into the Lean strategy and learn by doing.   
• Lean improvement cannot be delegated, it takes active leadership, starting with the top.
• Leaders must create tangible change.  They need to actively participate in kaizen that physically changes the work environment, the value streams and the work of associates. 
• Associates will watch your feet more then your mouth, leadership behavior is worth more then a million words.
• There will be lots of leaps of faith that each leader will need to overcome and staff will be watching them closely to understand how committed they really are. 
• There will always be some that will actively seek to block the Lean strategy and they need to be asked to find work somewhere else.  It is business and not a democracy.  People should be given many opportunities to learn and change, but at some point supporting the strategy in not optional.
• Leaders must understand the difference between mistakes and failure.  A mistake is something someone knows how to do and does incorrectly.  A failure is when someone tries something new and is unsuccessful.  There should be no excuse for mistakes and lots of forgiveness for failure.

In conclusion, Lean Accounting provides us with a set of tools and methods that when applied will support an organizations Lean Strategy.  Yet, like all tools they are only effective when they are guided by the right leadership. 

What is our Value Stream?  I hear this question over and over again as I talk with different leaders in different parts of the organization.  As we have deepend and broadened our Lean knowledge base over the last six months people have begun to conceptualize the organization in new and exciting ways.  We are taking our first baby steps away from the only view that matters is the vertical view of the organization to we must begin to think and manage horizontally like our customers experience us in order to bring about breakthrough improvement.   We are beginning to think about cause and effect and through a process view.  And most importantly, their is plenty of evidence that our silos are starting to break apart.

Now back to the question.  We are a fully integrated system that includes both the insurance/financing of healthcare as well as the delivery of care itself.  This is rare in healthcare where most organizations either sell insurance or provide healthcare services.  We do both.  So does that mean that we have two enterprise value streams?  The first being the insurance product we sell?  The second being the delivery system where we see patients?  Many would argue yes.  Other organizations in healthcare have identified their value streams at the service line level like Cardiology, Orthopedics, and Primary Care.  We could do the same?  Does it make sense?

I believe the right answer rest with our customers.  When they choose to do business with us I believe they want the highest quality care, that is affordable and has a minimum cost/headache to consume.  That is why I believe we need to think about our Enterprise Value Stream as being a single stream that weaves together the services provided by both our insurance and delivery systems and operations.  A powerful combination that creates the right incentives if realized.  By conceptualizing and then organizing our organization around this value stream we could do things no others in healthcare can.   The value of truly integrated care where the best patient is the one that never happened, because the disease was prevented in the first place.  The founders of our organization had this vision, but we have never been able to fully realize it.  I believe Lean provides us a path to get there. 

Last week I had a hallway conversation with a manager that has been applying Lean thinking and tools to her area for the last couple of years.  I love the conversations when people talk about those moments in life when things became clear and this was one of them.  I asked her if I could write a blog entry about this experience and she said as long as it was anonymous she would love me to share so here it is.

She told me she had just figured out why they talk about Lean as a never ending journey.  She had heard this many times, but it finally had become real for her and because of this realization she said for the first time in a year she was able to relax.   She had recently completed a rapid improvement workshop and as a result of this work many of the problems in her area had been solved.  Yet, soon after she began to identify a whole new set of problems that were created as a result of the change.  For the last year she had been working hard to solve problems with the hope of being able to solve them all.  As new problems continually popped up she would be frustrated and would only work harder, which over time was exhausting.

So the realization that freed her mind was that there would always be problems.  She was talking with a frontline staff member when this realization hit her.  He was telling her the evolution of a process they had been focusing on over the last year and discussed each of the problems that had come up as they had tried to make improvements.  This process had been a difficult one for the organization and our members and the team had made huge improvements over the last year, yet, changes kept creating new problems.  What was interesting was the each new problem caused headaches and frustration, but it seemed smaller then the problems of the past.  She suddenly realized that they were measuring progress in the wrong way.   That by the very nature of solving a problem the system changes, which will create a whole new set of problems.  That striving for perfection may be the target, but the real goal was to make improvement each and every day.  So as a manager her job was not to try and create a problem free environment, but instead to set up the conditions and system by which problems could be effectively solved.    

It is exciting to think how much more effective and engaged this manager will be armed with this new perspective.  I love these moments…

On Friday afternoon I received an interesting phone call from a gentlemen that I met this last spring at the Lean Enterprise Institute annual summit.  He has been following our journey on the blog and because our organizations are so similar in our business and experience he wanted to see if we could find ways so share knowledge, site visits and other learning’s.  This is one of the reasons I love the Lean community so much, because Lean people are so focused on learning from others and sharing what they have learned.

After agreeing to look for opportunities we spent more then an hour talking about where our organizations are and where they are coming from.  It blew me away how similar we are, even though we are in completely different industries (healthcare vs. banking).  They began their journey a few years earlier then we did, started a Model Line and are now adopting Hoshin Kanri, aligning around Value Streams and putting in a Daily Management System.  He shared a story about his organization’s focus on “getting today’s work done today”, a strategy they have recently adopted organization wide that has led to break through performance to everyone’s surprise.  After hearing this part of the story I asked if I could share what he told me on the blog and got the green light.  

The focus on Today’s work Today began a year and half ago after the organization had completed its first year of developing A3’s and deploying Hoshin’s and came out of the reflection process.  After the first year of Hoshin they realized that their processes were so unstable across their organization that attempting to realize breakthrough performance on an unstable platform was unrealistic and chaotic.  They did not hit a single one of their targets.  They needed to get the basics right first and standardize their processes.  At the same time they realized that their biggest obstacle to stabilization was variation in demand coming in from supplier organizations which led teams across the organization to carry large amounts of inventory to buffer their labor.   Thus Today’s work Today was born.

They decided to rollout a standard work program modeled after Toyota’s Daily Management System.  When they realized how large an effort this would be they came to the conclusion that besides adding the new products that they had in the pipeline as an organizaton they had the capacity to do nothing else.  This was a hard sell as the leadership table, because so many of the senior leaders had their own improvement strategies in process.  There was also a deep concern that a decentralized effort could add up to a bunch of point improvements that did nothing to improve the whole.  Despite these concerns they moved forward and all teams were provided training and the charge to reduce inventories, level demand and get today’s work done today.

After a year of focus, organization wide he told me that the results blew everyone away.  Not only had cycle time come down drastically, defects had been reduced by 75% and productivity was up 15%.  They had also grown a very important part of their business organically as customers realized they could get quicker turn arounds by doing business with this company.  With standard work in place they have begun to figure out how to move team members across work units in response to demand, which he believes will save them millions next year. Most impressive he said was just how engaged the workforce had become.  With a Daily Management system in place team members for the first time had a process where they could improve their work outside of an event. 

The reason I wanted to tell this story is because it illustrates just how powerful small improvement can be on the whole when they are added up.  It also illustrates that for organizations, like my own, that are early in their journey their is huge opportunity to be realized by just focusing on the basics and getting waste out of processes one by one.  Grand strategies are not necessarily required to get grand results.  I plan on acting on these learning’s!