DailyKaizen

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! 

Hi Everyone,

We received the following question from a reader.  I thought I would open it up to everyone before I gave my two cents:

We are getting educated about Lean and wonder if you have advice about selecting Consultants (or Senseis) to help us get move ahead effectively and avoid pitfalls?

Any input from others?

About a week ago I picked up on a recommendation a copy of the book Moneyball, by Michael Lewis.  The book follows the story of Billy Beane, the general manager of the Oakland A’s and his incredible ability to win year after year with a ball club that spends fractions less then other big league baseball teams.  Beane’s secret has been to break away from “traditional” baseball practice and thinking, which was heavily focused on finding individual superstars that could dominate opponents.  Beane, working for an organization with very limited resources knew that he could never compete with this type of strategy against the bigger named clubs.  Instead, he focused on the statistics and finding the less known and less expensive players that do small things right all the time.

For those of you that have not read this book I highly recommend it, it took me less then a week to finish and it made me think a lot, not about baseball, but about Lean and what I am working on in my own organization.   It was easy to take Beane’s methods and thinking and translate them from how he thinks about players to how organization’s think about opportunities.  Over the last couple of years working in many different organization I have been in countless forums where leaders dicussed finding the “home run” that if they could only just find it would lead to break through results.  Then off we go out to do significant amounts of analysis in search of this big win and we often end up frustrated, because we either can’t find it, or when we finally get it going it turns out to far less effective then we had thought (Mariners fans I am sure you can relate  :)   ).  This is a strategy that relies on a few people to come through with the big results.  Very unlean.

While I do believe that there are some “big hitters” out there for the organization I don’t think they will come easy or cheap (lots of resources and change management).  Maybe, like Beane we need to begin to think about how we find a set of decent hitters that consistently bring in returns without the big thrills, but also without the big organizational costs to get them?   If we take this approach it will take a lot more discipline, a lot more alignment and a lot more people engaged.  It will be less thrilling, with fewer big names, and a lot less resources.  Sounds a lot like Lean…

For the last couple of years we have taken the approach of focusing our improvement and Lean consulting resources in a small number of “strategic” areas.  There are many good reasons why we chose to take this approach.  Senior leadership at that time had not “bought into” Lean as business strategy for the organization and it was still considered process improvement thus much of the Lean work was “voluntary.”  As an organization we still believed in a traditional model of leadership that the leader was the boss and not the coach, teacher and facilitator.  The small number of Lean consulting resources had very limited experience and technical skill.  And the list goes on…

As the organization has broadened and deepened its view of Lean I believe that this approach now needs to be changed.  I would be the first to admit that I have been slow to recognize the need that we now need to find a way to fill.  As we push forward with Lean as our enterprise wide business strategy we must supply the means for people to learn.  We can no longer be selective about who gets to participate in “Lean” activities and thinking.  Everyone must do Kaizen, and as a leadership group we need to figure out a way to provide the level of education to advance 10,000 toward greater improvement.  This is the only way we can reach our long-term goals and fulfill our mission. This does not mean that everyone has to learn at the same pace, but I do believe that everyone needs to know enough to improve.   To not do this will result in the “haves” and the “have nots” taking hold, a dangerous problem at this time on our journey. 

My view on this has changed as I have watched the work in the Model Line advance over the last year.  As you will recall we took the time and provided the resources to ensure that everyone had the chance to learn how to put in standard work, level their work, measure the work, make their work visible and PDCA.  Over time I have watched the culture change, much of which was an outcome of this new learning.  Overall, it was not the consultants and trainers that were most taxed for resources by this effort, but instead the management team.  This is exactly why it worked, because they were asked to not only manage in the new world, but also teach and lead improvement.  To teach and lead improvement they needed to know their processes and so on.  While not perfect, kaizen as a way of life has begun to seep into the Model Line workforce. 

I think there will be some that don’t agree with this approach.  For one, everyone will be for training until they realize that leaders will be the delivery method in this new world.  I expect for some this will be excited and for others terrifying.  Others will be overtaxed by resource constraints and the more proactive world of the future will be very hard to see in the present.  Finally, from a Lean consultancy perspective we need to figure out how we will raise a big enough network of support resources to make this possible, and possible quickly.  A good, and hopefully not optional challenge for us all!

Now

I am currently engaged in a great benchmarking and learning journey that I am taking with the Chief Financial Officer of my organization.  Our challenge is a difficult one and I am looking for some of you, the readers of this blog to help me think through our strategy and approach.  In return, I promise to share with you all our story over the next year.

Our goal is to redesign our financial and performance measurement systems.  As the organization has adopted Lean as an enterprise/management system transformational strategy we have quickly realized that our current financial and performance measurement systems will hinder our efforts for change.   The current systems primary purpose is to put controls on spending within our functions with the primary tool being the budget.  We know this drives all kinds of waste and does not support our efforts to create continuous improvement within every team with year over year cost and productivity improvement. 

Our goal is to develop a total cost framework for the organization that allows us to understand the primary drivers of cost.  This will allow us to focus on specific drivers, prioritize opportunities and align resources to our greatest opportunities.  Once the framework is created we hope to begin to transition the way we think about cost from vertical to horizontal by organizing our measurement systems around our Value Stream.  Additionally, we hope this coming year to deploy cost and productivity targets through our Strategy Deployment process to each of these value streams. 

As we have started our learning process we have found it very difficult to find service related examples that translate into our language let alone healthcare examples.  We have read some excellent materials like the new book by Orry Fiume called Real Numbers, but are hungry for other stories, tools, examples of frameworks and materials.  Please share any information if you can and wish us luck! 

This last Friday I got a chance to return to the Model Line and conduct some process walks with the senior leadership team as part of the executive training program I have discussed in several posts.  The focus of the process walk was to teach the leadership team the basics of what, why and how of visual control systems.  For me, it was a fun opportunity to see how far the Model Line has progressed since my last visit a couple of months back.  More specifically, I was interested in seeing the leadership standard work processes that are being put in place in support of the Daily Accountability system. 

Overall, I was really impressed.  Over the last couple of months a three tiered accountability system has been put in place that links the front line teams to the Value Stream owners to the Vice President over the entire operation.  Each tier has it own visual control system that details the standard work of the team/person, the plan vs. actual, the improvement work underway and the checking schedule for the managers. 

We started the walk at the production team level in our customers service department where each team has a detailed production board in place.   This is called a tier one area for our accountability system. The board shows production targets vs. actual on an hourly basis as well as the reasons why each target were missed.  The board also has an improvement suggestion area as well as a detailed list of improvements under way.  On the backside of the board is a checking schedule and standard work for the front line supervisors which shows their hourly standard work. 

During our next stop we visited the Value Stream leaders improvement board, which is a tier two area.  The board is similar to the production team, but instead of showing the plan vs. actual hour by hour it instead day by day.  This board includes a section for root cause analysis as well as countermeasures in process across teams.  On the back side of the board is a checking schedule for the Director including standard work for the day.

Finally, in the afternoon I got a chance to visit the VP’s visual control, which is a tier three area.  The board links very nicely with the tier two board and shows plan vs. actual across all of the functions on a weekly basis.  This board also has a checking schedule as well as standard work for the VP.  In addition, the board has a set of A3’s identifying strategic improvement work underway across the value stream.

It was really impressive to see how much more disciplined the management system had become.  It was equally as impressive to see how the visual control systems linked the layers of the organization and how they support the reduction in variation in both work processes and management processes.  Each of the boards had clearly been PDCA’ed dozens of times to reflect improved thinking and demonstrated the evolution of the improvement of the management system.   I wonder what will change in the next couple of months?

Problems are gold.  So the good news is that over the last six months or so as an organization we have gotten a whole lot better at making problems visible.   This is a great thing, since the problems have always been there, but in the past they have often remained hidden due to a variety of reason.   They have begun to become visible both as the result of processes that we have begun to change as well as changes we are beginning to make in our management system.  I also believe this is a good indicator that the culture of the organization is beginning to change for the better.   Slowly, over time I have watched how the transparency and openness of dialog between leaders has increased and with it the opportunity for improvement.

One of the biggest challenges we have with this heightened awareness of problems is the need for the organization to have systems, processes and capabilities that allow it to quickly solve these newly found problems.   This is an area that we are not yet very good at.  This has become very obvious over the last month as we have driven the checking process down through our organization to monitor our progress toward strategic targets.  Every checking session we find areas where our hypothesis were incorrect and we are needing to put in place countermeasures to get us back on plan.  The good news is that we know we are off plan and we need to intervene.  In the past we would not have even had that level of awareness.  The bad news is that our problem solving methods are non-standard, to slow, are lacking urgency and are lacking depth on the technical side.  Basically, we don’t know how to swarm problems. 

So, like I said in the beginning of the post: problems are gold.  From a management system perspective we now have a new problem and the root cause is that as an organization we don’t know how to solve problems.  So our countermeasure is simple: we will ramp up our capability through education and more importantly a whole lot of experience.  We sure have a lot of problems to practice with   :<)

As we move forward with our enterprise wide transformation there are so many new skills and capabilities that we will need to teach leadership across the organization. In order to prioritize and focus this year there are two main parts of our management system that we are focusing on improving our leadership development activities. The first is to institute a rigorous check and adjust system and the second is to teach leaders new ways to drive improvement. We have deployed a plan through the Hoshin system, but being the first year we know that many of our hypothesis will turn out to be incorrect. This is exactly why we decided to focus on these two critical areas. This way leaders are able to quickly identify the problems that we know will come up through the checking process and provide teams with new ways to adjust through the learnings from the improvement capabilities.

Underneath the checking system there is a very important capability and process that we are putting in place that many organizations call Gemba walks. At Group Health we refer to them as workplace rounds. Several leaders have been conducting gemba walks with great success for the last year, but this last week our CEO and several other members of the senior leadership team began these very important workplace checks. There are many reasons why we need to put this system in place and build this capability in our leaders. First and foremost, we need to change the behavior first in order to change the beliefs and thinking. This means focusing on how leaders spend their time and in this case getting leaders to deepen their understanding of the work processes, defects, root causes by going to the place where were takes place.

As many of you know a gemba walks serve many purposes. They allow leaders to audit the standards of the strategic plan to ensure that we are on target and if not, why not. They strengthen the discipline of the management system and build accountability up, down and across the organization. Finally, they allow leaders to play the role of teachers and connect associates work to the larger picture, advance teams thinking to the next level, drive daily accountability and help identify opportunities for improvement.

At first our focus will not be on the quality of the walks. Instead we will focus on the adherence to the schedule. In other words, we will focus on getting leaders into the rhythm of doing walks on a regular basis and with a standard process. This is the best way for them to learn, because without practice there is no way to get better. Over time, if they stay the course I believe gemba walks to be one of the best way for us to begin to shift the culture of the organization. Leading with your feet instead of your mouth is the best way to get people to follow and gemba walks go right to heart and soul!