DailyKaizen

Sorry to all the readers of this blog that I have not written very much lately.  The last month has been really busy and I have not had much opportunity to step away and reflect on everything that is happening.  We are in the process of defining our enterprise Value Streams, starting the second cycle of our strategy deployment process, redefining our budgeting process, etc.  The pace of change seems to grow daily. Walking out the door this Friday evening I was chatting with my Sensei and we were both really tired, yet, full of optimism.  She looked over at me and asked “did you every think we would get the company to go this far?”  Honestly, I am a pretty optimistic person, but I would be lying if I said yes. 

Our biggest challenge now as a Lean group is helping senior leadership bring it all together.  This marks a real and substantial change in our focus.  For the last couple of years as a team we have been working opportunistically to identify leaders that could become Lean champions and to support them in driving business results.  In many ways a “proof of concept” effort.  In the last seven to eight months this has changed as senior leaders have embraced Lean as a business strategy and management system.  The conversations are far more exciting and often challenging now then they were in the past.  Its no longer about “if” we do this, it now about “how” we do it.

A year ago a senior leader in the organization described our organization as collection of “900 management systems”, one for every manager in the organization.  So when I say we need to bring it all together what do I mean?  Basically, starting last year with our strategy deployment work we began to define and standardize the management system of the organization.  It was just a first step, but it gave us a foundation that we can now begin to systematically build out from defining management practices one at a time and ensuring that the entire system works effectively together.  There are countless examples of management practices that we need to standardize and bring into alignment.  Many of which we are already working on.  This includes our budgeting process, compensation, job design, measurement, etc.  The best current example is our work over the last month with Value Streams.  Value Streams as a management system and not just and improvement tool. 

We are simply taking the same thinking and practices we use to improve our work processes by implementing standard work and PDCA and applying them to our management practices.  We believe that by creating a single system that can be describes as the “way we” manage at Group Health we will create a strategic advantage that drives business performance.   This will not be easy, but a year ago I would have never believed we would even be starting this work.  Progress!

Healthcare is a heavily regulated industry.  There are literally dozens of government agencies and oversight organizations that have an oversight function.  This means there are lots of rules, regulations and policies that have an impact on almost every process.  While often all of this oversight can be frustrating and wasteful for the most part it serves a purpose.  Regardless, it is only good business to make sure that you are compliant.

Over the last couple of weeks during the value stream work it has been interesting to see how rules and regulations have been interpreted and deployed into the processes of the organization.  As we conduct process walks I have learned that you need to question every rule.  So often we have heard teams tell us that things cannot be changed or improved, because of a rule or a policy.  While much of the time this is very much the case, just as often it proves to be more perception or interpretation then fact.  For example, we visited a team early last week that had a double check built into their process that greatly increased cycle times.  The team believed that this check was necessary as defined by a government agency, but this was not really the case.  At one point, years ago, this checking process was required, but the regulations had changed.  This change had never been communicated, so the team continued to over-produce. 

Let me be clear that my message is not to encourage teams to not be complient.  I am simply calling out that so often what we believe to be true, or what once was true in no-longer true.  In highly regulated industries it is very important for organizations to not be passive about understanding, managing and communicating rules and regulations.  These rules will constantly be changing and teams doing the work need to be supported in helping interpret or deploy these changes.

Four years ago when I first began working in healthcare I was amazed how difficult it was to get work done outside of a functional area.  I worked at three different organizations during graduate school (internships) and then took a job with my current employer and all of them were completely siloed.  The first internship I worked with a team that had such a bad relationship with the teams up and down stream that they basically refused to even talk to their co-workers unless a problem got so bad it could not be ignored.  At a different organization I worked with a team where 50% of their work was sorting documents in a certain way so that they could be scanned by another team.  The team downstream changed their software and suddenly they did not need to have the documents sorted in the old way.  For some reason the message never got to the upstream team for almost three years, meaning that two full FTE’s worth of work was wasted for the entire time.  I could only shake my head. 

For some reason healthcare organizations really struggle with cross-functional management and improvement.  I am not sure the root cause for this challenge but I can guess it has to do with the following:

• A lack of clarity of who the customer is
• A lack of translation of customer requirements into work processes
• Lack of effective measurement systems
• Functional as opposed to cross-functional goals
• Budget > Strategy
• Specialization of work roles that set up long-standing hierarchy
• Antiquated structures and excess bureaucracy
• etc.

As you all know silos drive incredible amounts of waste and lead to all kinds of performance related issues.  As we began the Value Stream work this week that I discussed in my last post the team I am working with was quite literally blown away by the potential we found for improvement event though we just started.  Every team we visited was doing redundant work, over processing, missing opportunities to better serve their customers, had work processes that led to problems downstream, etc.  All of this because the teams were not connected to the teams either up or down stream from them. 

 The healthcare organizations that figure out how to overcome this issue will dominate over their competition.  One of the things that most excites me about Lean is that it provides a solution to this challenge.  There is evidence all over my organization that silos are in the early stages of breaking down.  The Value stream work is just one of many examples of how we are learning how to better understand our customers and then align our process across to better serve them.  Very exciting.

Tomorrow is a big day for the organization and a major milestone for our Lean journey.  For the first time we are going to begin the process of putting in place a cross-functional management system through Value Stream mapping.  Our Executive team has identified our six “enterprise level” value streams and we will begin to map and transform two of them tomorrow by kicking off a cross-functional team.  The goal is to have future states designed by the time we enter our strategy deployment process this October and the entire organization re-aligned around Value Streams by January 2010.

As many of you know Toyota and many other Lean organizations have three management systems:  Management by Policy that focuses the organization’s improvement resources on the vital few breakthroughs; the Daily Management system which is the foundation of standard work and continuous improvement; Finally, the Cross-Functional management system which aligns an organization through the translation of customer requirements into process standards.  Last year was all about putting in place a Management by Policy system and the year prior was about learning how to put in a Daily Management system.  While we still have a lot to learn and a lot of work to do in continuing to advance this work it is also time for us to take the next step by focusing on how to align and improve our processes through cross-functional management. 

For several years now we have used the tools of Value Stream mapping to transform large sub processes of our business like claims processing, pharmacy, laboratory, Primary Care, Information Services, etc.  Yet, our efforts have never taken on a management system focus to fundamentally redesign our organization to support value creation.  That will change moving forward.  Since as an organization we are both the financing and delivery of care we have a real unique opportunity in healthcare to use cross-functional management to design products that truly drive value for the members we serve.  Our incentive, unlike in most healthcare delivery organizations is to keep people healthy.  By using cross-functional management I believe we can create far more value then any insurer or delivery system could do on their own. 

Like with all of our other management system work a focus on creating a cross-functional management system will not be easy.  It means a lot of peoples jobs will need to change as we realign around our value streams.  Current structures and decision making paths will shift and mid-management will be strained to navigate the ambiguity of change.  Success is dependent on capable, active, and available leadership.   There will be bumps and we will make mistakes.  Yet, if we stay the course and focus on the customer it is a change we can make.  The reward it to great to not.  I have no doubt we could be the best healthcare organization in the country, by all standards if we execute.