Managing On Purpose

John ShookChairman and CEOLean Enterprise Institute, USAChairmanLean Global Network

Lean Institute TurkeyDecember 3, 2013

Bursa, Turkey

www.lean.org

The State of “Lean” 2013

• We intend to make the world a better place through Lean Thinking & Practice

– 25 years of “lean”, 50 years of TPS, 100 years of “flow”

• We’ve won some battles– Auto industry

– Healthcare

– New frontiers

State of the LIT Summit 2013• Great progress since my first visit

– Excellent presentations from Turkish cos.– Management level, operations level– New sectors and new regions

• Important conversations I heard:– Worker-management divide– National and corporate culture– Terminology – word games– Lean Transformation – how?– “How to make” – “what to make” – “why to make”

Purpose Achieved through Processes and People Aligned by Management

4

Today

New United Motor Manufacturing, Inc. – NUMMI – built its first car in December 1984 and its last on April 1, 2010.

NUMMI kick-started a revolution.

Joint Venture

Lean Success in North America

Agreement between Toyota and GM: Toyota manages the plant viathe Toyota Production System

GM’s “worst” (certified worst) plant:QualityWorkforce

Former GM workers offered jobs: Including the old “troublemakers”

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ResultsIn about one year…

Quality Best ever in GMEqual to Takaoka Japan

Productivity Best in GMClose to Takaoka Japan

Employee development:Some ClassroomMostly OJT or OJD

TPS established:Technical- Physicals, “hard”

technology- Product, plant layout, etc.

Social - “Soft” technologies- Management/people

systems

(Note: “soft” doesn’t mean “easy”!)

• “Establish mutual trust”• “No problem is problem”• “Lead as if you have no power”• “Before you build cars, build people”

Four lessons in leadership from NUMMI:

• It is an Organizational and • A Personal Transformation.

Lean Leadership

•…is obviously different from the old command and control dictator.You can see that quickly

•It is equally different from the commonly accepted notion of the “enlightened modern manager”

That part is less obvious

• Get each person to take responsibility to solve problems and improve his or her job

• Ensure that each persons’ job is aligned to provide value for the customer and prosperity for the company

Begin with yourself!

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Define Your PurposeImprove the Work, Develop the People

Leadership Styles

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Lean vs Traditional Leadership

RESPONSIBILITY-BASED

Focus:

Make the Right Decision

AUTHORITY-BASED

Focus:

The Right to Make the Decision

GM Fremont What went wrong?

GM Fremont What aligned business purpose?

Lean is a management system!

to align:

•Process•People•Purpose

to create value

Lean EnterpriseTransformation Model

What’s the PURPOSE?

•How to improve the work?•How to develop the people?•What leadership role and

management system?

What’s the BASIC THINKING?

TheThe TToyotaoyota PProductionroduction SSystemystem

Just in TimeJust in Time““The right partThe right partat the right timeat the right timein the right amount”in the right amount”

HEIJUNKAHEIJUNKA

JidokaJidoka

Production LinesProduction Lines That Stop forThat Stop for AbnormalitiesAbnormalities

Best Quality - Lowest Cost - Shortest Lead TimeBest Quality - Lowest Cost - Shortest Lead TimeThrough Shortening the Production Flow By Eliminating WasteThrough Shortening the Production Flow By Eliminating Waste

““Built-in Quality”Built-in Quality”

Stability and Kaizen

TheThe TToyotaoyota WWayay

Continuous Continuous ImprovementImprovement

RESPECT RESPECT For For

PEOPLEPEOPLE

Customer FirstCustomer First

Challenge – Kaizen – Genchi GenbutsuRespect - Teamwork

Lean Transformation Model

PROCESSPROCESSIMPROVEMENTIMPROVEMENT

Continuous, Continuous, real, practical real, practical

changes to changes to improve the way improve the way the work is donethe work is done

CAPABILITY CAPABILITY DEVELOPMENTDEVELOPMENT

Sustainable Sustainable improvement improvement

capabilitycapabilityin all people in all people at all levelsat all levels

SITUATIONAL APPROACHSITUATIONAL APPROACH- Value-Driven Purpose - - Value-Driven Purpose -

““WHAT PROBLEM ARE WE TRYING TO SOLVE?”WHAT PROBLEM ARE WE TRYING TO SOLVE?”

Basic Thinking, Mindset, AssumptionsBasic Thinking, Mindset, AssumptionsThat drive this transformationThat drive this transformation

Responsible Responsible LeadershipLeadership

MANAGEMENTMANAGEMENTSYSTEMSYSTEM

WHAT is our

PURPOSE?

What situational problemdo we need to address?

How to improve the work?

How to develop

the people?

What is our BASIC THINKING??What is our BASIC THINKING??

What leadership

behavior and management system do we need?

Transformation Model Questions

1. What is our purpose or what problem are we trying to solve, what value to create?

2. How do we improve the actual work?

3. How do we develop the people?

4. What role must leadership take and how does the management system support the new way of working?

5. What basic thinking or assumptions underlie this transformation?

Lean Transformation FMEAFailure Mode and Effects Analysis

FMEAFMEA Transformation

DimensionsPotential Failure

ModePotential Failure

EffectsPotential Causes

Current Process Controls

Actions Recommended

After Action Review

Dimensions 1-5 What failures in this Dimension may cause failure of the Enterprise Transformation?

What is the potential impact on Quality, Delivery, Cost, and Culture (safety, morale, CI)?

List every conceivable failure and/or failure mechanism for each failure mode.

What are the existing social or technical systems or processes that prevent the failure mode or its cause?

List Countermeasures to reduce the Probability of Occurrence of the failure mode of cause.

What actions were taken, what experiments run? Did they have intended result? Why or why not? What was learned?

1. Purpose - What is the purpose or what problem are you trying to solve?2. Process Improvement - How are you improving the actual value-creating work?3. Capability Development - How are you building capabillity to work in new ways?4. Leadership and Management System - What leadership behaviors and management systems are required?

5. Philosophy, Basic Thinking, Underlying Assumptions - What basic assumptions or mindset underlies this change?

TRAN

SFO

RMAT

ION

of O

RGAN

IZAT

ION

XX

Transformation FMEAQuick-Check

FAILURE MODE EFFECT CAUSE

PURPOSE

PROCESS

PEOPLE

LEADERSHIP

THINKING

Transformation FMEAQuick-Check (examples)

FAILURE MODE EFFECT CAUSE

PURPOSE Agreement Conflicting policies

Poor communication

PROCESS Quality Much scrap and rework

Workers and leaders rely on final inspection

PEOPLE Right skill levels Don’t perform jobs properly

Unclear hiring standards; no standard training

LEADERSHIP ? ? ?

THINKING ? ? ?

State of the LIT Summit 2013• Terminology “alphabet soup”

– TQM– WCM (World Class Manufacturing)– TPS– Toyota Way– Six Sigma– Lean Startup– Japanese terms – two that matter

KAIZENGEMBA

Lean…

People & Process – aligned by leaders to achieve purpose

Lean EnterpriseTransformation Model

What’s the PURPOSE?

•How to improve the work?•How to develop the people?•What leadership role and

management system?

What’s the BASIC THINKING?