Lean for Leaders

Leading a lean enterprise.

What does it take and why is it important if it is?

Certainly there are executive skills that are important for a successful leader. I spoke to someone today who believed that one of their success secrets was being able to focus on one thing at a time until completion. Kind of hard to argue with that idea until you begin to break it down.

Say my top priority is to solve a cost problem. I drop everything for a meeting with the three department heads and the accounting manager. We develop an action plan. They have daily meetings for status. All of the work to get to the bottom of this issue is in their hands. After the meeting I have a decision. Do I keep working on this problems myself and wait and see what they come put with which would be according to plan. I can certainly spend alot of time worrying about the problem – I can focus on this one issue and use my time to worry, investigate, worry, investigate, and in the process cover alot of ground that my three managers are covering now, and some ground that really doesn’t need to be covered at all.

Or I can go onto my next priority and put this one out of my mind until it comes back tomorrow. And this is where the first important executive skills is required.

Managing multiple priorities simultaneously. An effective leader cannot tell their subordinates – I’m sorry, I’m not going to meet or talk about anything else until I get this top priority problem solved. In most cases – and perhaps there may be exceptions but few – putting everything else on hold hurts the business, stalls important efforts by others, and wastes alot of your own time because you just cannot fill your time effectively with tasks that must be done by you.

Along with this first skill follows the next one. Managing information about your top priorities. You need to be able to take good notes. People laugh at the executive who takes constant notes in meetings in a big book. But this is how a mature executive manages information – by priority – along with action items, who is doing what, etc. There are those who can do this all by memory. Most of the executives I have met who believe they can do this by memory do a very poor job but nobody can tell them that because they pride themselves on remembering everything – big mistake. Ego substitution for effectiveness – “self-made-man” syndrome.

The next skill ties it together. Put everything in a time frame. If you put everything that needs to happen into your calendar as a meeting, a follow-up call, a trip, or something concrete that has to be done by a certain definite time, you will not be able to escape what you must do to be effective. You can write these things on a list but it will not have the power that placing them into your calendar has. And when you say “We’ll check on this tomorrow without stating a time and place, you will find everyone else making excuses for why it didn’t happen.

These are fundamental executive skills. Most people do not have these skills. Even experienced leaders often do not exhibit these skills. It takes a highly disciplined leader to focus on the basics and get them right continuously.

Leading lean takes the same discipline. But first let’s consider why this might be important.

Being competitive in any of today’s markets relies on how fast you can improve. So you’re delivering your product on-time 95% of the time. How fast are you moving toward 100%? Effective lean leadership relies on executives who are highly disciplined and apply the skills listed above to the task of lean leadership.

We list five processes that we believe to be essential for lean leadership.

  • Strategic Planning – setting and managing longer term priorities.
  • Leadership Communication – establishing processes for communicating priorities and status and hearing feedback from the entire organization.
  • Organizational Performance Review – reviewing performance at all levels on a regular basis.
  • Continuous Improvement Management – establishing responsibilities, assigning roles, and reviewing progress on all areas of continuous improvement/lean implementation.
  • Workforce Development – establishing and managing processes for workforce development.

Lean leadership is simply setting up conditions where a predetermined percentage of your time is devoted to sponsoring and leading improvement activities. If your lean leadership is “on-again” and “off-again” then you’ll need to give some thought to how you might establish these five processes so that you cannot escape the responsibility to continuous improve the business.

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Blind Leader

Wake-up; You’re Blind

Most of us are forced to manage as if most of what we need to know about leading others is already known, already discovered, and specifically, known to us. But in our quiet moments, we would have to at least agree intellectually that of all of the vast body of knowledge on the planet about leading people effectively, we have been exposed to perhaps less than 10%. And beyond that, it is logical to conclude that aside from what we know, what we don’t know we don’t know about human beings and what makes them loyal, committed, and high performing is a body of knowledge that dwarfs what we do know.

What You Know

Given this perspective, we would have to declare ourselves “blind” when it comes to leadership. And it would be more appropriate to examine the plight and coping mechanisms of the blind when it comes to evolving as a leader.

Is “Blind” the Right Word?

Main Entry:            blind
Pronunciation:            ‘blInd
Function:            adjective

Etymology:            Middle English, from Old English; akin to Old High German blint blind, Old English blandan to mix — more at BLEND

Date:            before 12th century

1 a (1) : SIGHTLESS (2) : having less than 1/10 of normal vision in the more efficient eye when refractive defects are fully corrected by lenses b : of or relating to sightless persons

2 a : unable or unwilling to discern or judge <blind to a lover’s faults> b : UNQUESTIONING <blind loyalty> <blind faith>

3 a : having no regard to rational discrimination, guidance, or restriction <blind choice> b : lacking a directing or controlling consciousness <blind chance> c : DRUNK 1a

4 : made or done without sight of certain objects or knowledge of certain facts that could serve for guidance <a blind taste test>; especially : performed solely by the aid of instruments within an airplane <a blind landing>

5 : DEFECTIVE: as a : lacking a growing point or producing leaves instead of flowers b : lacking a complete or legible address <blind mail>

6 a : difficult to discern, make out, or discover b : hidden from sight : COVERED <blind seam>

Given the definition, if the practice of leadership is conducted “without sight of certain … knowledge of certain facts that could serve for guidance”, we might conclude that one way to talk about it is to say that we’re “blind.”

Blind from Birth

What is it like to be blind from birth? No remembered images for colors and sights. No sunrises and no sunsets. No visual perspectives like the view of the distance between home and the office. When you’re blind from birth, you have to make up the images in your mind from descriptions provided by others and by running your hands over things in your environment. You have no memory or experience to draw on. And you can easily reach conclusions and develop images that are far from accurate.

And when you’re blind from birth, things that you haven’t perceived don’t exist. You don’t know what you don’t know. So if you’re walking down the street and it begins to snow, you might only conclude that the air was colder and wetter than usual, but developing the mental picture of snow would be quite difficult and unexplainable in your perceptive framework. You could easily miss altogether the knowledge of the existence of a snowflake.

And when you found yourself at the ocean and heard the crashing of the surf and approached the edge of the water, you might reach down and feel a wave crashing over your hand, but without someone describing to you in visual terms what you were hearing and feeling, how could you turn that into a complete picture of a wave?

Blind Leader

What about a blind leader? We have no visual images for a high-performing organization. We can’t see what people can really do. Just like the snowflake, we have no real concept of the intricacy of organizational performance.

And like the visit to the ocean, we’ve experienced the feeling of working in an organization. We’ve had the experience because we worked in an organization and experienced leadership. But does that mean that we know what leadership really is?

If we are truly blind to leadership, how can we know what real leadership might be?

The Enlightened Leader

Enlightened Leader

Most managers will travel along the horizontal path for their entire career. They will develop their skills, and gain knowledge that will lead to becoming a better manager. Their results will improve and they’ll find it easier to manage people every year they remain committed to it. Their skills at performance management, planning, communicating, and handling conflict will all improve and at the end of their career, all those who have come to know them will praise them for their even hand and track record of achievement.

Meanwhile, because we are blind, no one will guess that the performance available from an organization under this manager could have broken all records.

In the land of the blind, the one-eyed man is king.

The successful person who has functioned without the use of sight since birth knows they are blind. They begin almost immediately to develop their other senses and their ability to create pictures of their world. The successful blind person doesn’t have to deal with the normal barriers that sighted people have. They develop their imagination and capacity to create clear pictures of performance in any situation from the time they are very young.

Meanwhile the sighted leader functions under the impression that because they can see, hear, touch, smell, and taste, that they are in possession of all of the data they will need to build a high performance organization. Yes, having the use of the five senses is a definite handicap in the world of leadership.

The Facts

Because what our five senses tell us about the world has been proven to be false, or haven’t you heard? Think about the implication of these scientific facts:

  1. We are not separate physical bodies but a part of a universal energy field.
  2. What appears to be solid matter is nothing more than an energy field that we perceive to be solid.
  3. What we expect to observe is what we observe; our expectations cause our experiences – not the other way around.

So given these simple scientific facts, we have everything to do with the performance of those around us… in fact, we are the cause of organizational and individual performance or lack thereof.

And we’re “blind” about that fact and don’t know it. Because if we were aware of this blindness, we would begin seeking to build our mental pictures toward the end of making up for that blindness.

The Blind Leader

Here are some things that a “blind leader” might do to discover the landscape and the road to high performance.

  1. Conduct many experiments to learn what works and doesn’t work to gain loyalty, commitment, and ownership among the workforce. Develop mental pictures of people performing favorably. See people over-coming obstacles and dealing with tough problems.
  2. Establish leadership values for the organization. Make a values contract with the workforce. Rely on the self-management, personal responsibility, and innovation of the people in the organization.
  3. Explore ways of changing your perceptions to allow people around you to be OK. Provide encouragement even when there might be reasons not to if all the facts were known.
  4. Approach daily work as if you didn’t know what you’re doing rather than from the perspective that you do know what you’re doing. Assume that you don’t know everything you need to know. Listen as if everyone has the ability to brief you on a part of reality that you missed and need to know in order to be successful.
  5. Follow the road in the direction it’s going. In the song, “He ain’t heavy” the Hollies sing the lyrics, “The road is long; with many a winding turn; that leads us to who knows where.” When a team is clear on its vision, the universe conspires to place the road before us with everything we need to complete our mission. A blind leader doesn’t question the road.
  6. Learn about process maturity. Managing and accelerating improvement in an organization is impossible without a roadmap. The Process Maturity Model is that roadmap. Everything else is just firefighting cleverly disguised as progress.

The Leader’s Guide to Cost of Quality

What is “Cost of Quality”?

The Cost Of Quality “COQ” is the cost associated with delivery a product or service to a customer that is perfect, error free, functions as promised, and anything else the customer considers to be required.

Given the definition, the costs associated with COQ are not just the obvious failure costs such as scrap, rework, warranty, but also the costs of inspection, expediting, managing the process, and many other costs as shown in the Iceberg.

Iceberg

If a process delivered a quality product or service every single time without fail, scrap would be zero, warranties could be infinite because they would cost zero, and there would be no need for inspection, expediting, and managing the process including the many other costs that are less obvious.

Why is COQ important?

If the cost of quality is 30, 40, or even 50% of sales as it is in most companies, then it is important – even though most companies consider all of the things mentioned above as a part of COQ as “business as usual.”

Business as Usual

Most companies stop trying to improve at about 30% COQ. They mostly consider those costs as “business as usual” – “you can’t have perfect processes, you can’t operate without mistakes, you can’t have perfect processes, etc.” – but these typical statements fly in the face of the evidence. Companies are finding ways to avoid that cost and when they do, they become fierce competitors because they can quote prices below what you consider to be the cost of doing business. How will you compete with a company doing what you do that has a COQ of 5%?

Calculating COQ

Want to take a rough cut at your COQ? The traditional way is to just add up the cost of scrap, rework, warranty, inspection, inventory carrying costs (20% per year), expediting, and a healthy portion of supervision and management payroll because they spend most of their days firefighting, and you get a rough COQ.

Another way and possibly more elegant in it’s simplicity is “Rolled Yield.”

Rolled Yield

A term used mostly in the six sigma movement, it’s a metric that takes the yield at every step of the process – the ‘first pass yield’ is what’s intended here – and multiplies it together to get a rolled yield figure. At first this might seem like gibberish but there is a logic whose explanation goes beyond the scope of this post but if you need it send me a reply with your email and I’ll send you a copy of the article – or you can just pick the book “Six Sigma” and read chapter six. Basically this rolled yield accumulates the amount of work that is done and PAID FOR, that does not result in a usable product or service.

So for instance, if you have four steps in your process and the first pass % yields are 80, 90, 90, 95 then you would simply multiply each as follows .80X.90X.90X.95 = .6156 or roughly 61% rolled yield.

Now to apply that to get COQ, simply multiple the total cost of your operations, say it’s $1M per month times 39% (the reciprocal of 61%) and you get a COQ of $390K per month.

Now notice that’s $390K per month that could be going to your bottom line if you had mature processes that did not require “business as usual.”

Changing Your Mind

As leaders, our job is to define what is and isn’t “Business as Usual” and everyone else will follow our lead – that’s why they call us leaders. If we say that all of this cost is Business as Usual then nobody is going to work on reducing it. But if you say as they do in Toyota, all waste is bad and nothing is Business as Usual, then you have set the pace for excellence. You may not know how to achieve zero defects, but it’s clear that you decide whether it needs to be achieved.

In most cases this means you need to change your mind about what you consider business as usual.

Demanding Process Maturity is a way of changing your mind.

Leading Process Improvement

Should process improvement be #1, #2, #3, or lower in priority for small manufacturing suppliers? Machine shops, fabrication, plastics, electronic assembly, circuit boards, etc. Whatever your business, if you’re a small family-owned company you have competing priorities. You may work on the floor part or most of the time, you may try to supervise and manage people who work for you, and some family members – it’s hard to picture yourself working in an office for more than a few minutes with so many competing priorities. And perhaps you never saw the business employing 100, 200, 300 – as the business transitions we are challenged to take on the new role of leader.

This blog will discuss the issues of being a leader. How to transition from worker to leader, what you need to know to set your priorities, how to build the business without losing control (that is if you ever had control).

I want to talk about process improvement, continuous improvement, process maturity, lean systems and implementation, 6S, flow manufacturing, just-in-time, pull systems, and more from a leadership perspective.

You have a wealth of experience so I hope you’ll contribute your comments as well.