June 18, 2007

Hi MBBP Subscribers,

I didn't write this week's MBBP Bulletin. I decided to copy a letter I received from Jim Womack of www.lean.org. He is a leading educator on lean manufacturing and I think you'll enjoy reading his letter as I did.  

I've taking the liberty of calling it, "Backsliding to Old Ways of Working."  

Have a nice day and stay connected.

Bill Gaw
Business Basics, LLC
bg@bbasicsllc.com
760-945-5596

BACKSLIDING TO OLD WAYS OF WORKING

Dear Bill,

I recently got a call from an old friend who led one of
the first lean implementation efforts in healthcare in
the mid-1990s. He has moved on to other challenges and
we hadn't had a chance to catch up in recent years. So
I asked him what happened to the lean initiative in the
healthcare organization where he had been a senior
manager.

The answer was what I feared. "We created a lean
improvement team and conducted a comprehensive campaign
to kaizen the organization's key value streams. And we
had dramatic results. Faster patient flows. Better
outcomes. Lower costs. But we couldn't sustain the gains.
The improvement efforts weren't connected to the way the
organization was managed and the value streams started
to regress to the mean as soon as the improvement team
left. After I left the organization, the whole program
came to an end. What a shame."

My friend is far from alone. In our annual LEI web survey
of the Lean Community, a leading problem Lean Thinkers
always note about their improvement efforts is
"backsliding to old ways of working" after initial
progress. And the most frequently cited issue this year
is "middle management resistance" to change. In short,
the lean movement has a sustainability issue we now
need to address.

What is at the heart of our sustainability problem?
More important, what can we do about it?

I believe that the root cause of regression in most
organizations today is confusion about priorities at
different levels of the organization compounded by the
failure to make anyone responsible for the performance
of important value streams as they flow horizontally
across the enterprise.

To prevent regression, someone needs to periodically
clarify priorities for each value stream and identify
the performance gap between what the customer needs
and what the value stream is providing. The person
taking responsibility then needs to engage everyone
touching the value stream in carefully capturing the
current condition (the "current state") of the value
stream which is causing the gap. The next step is to
envision a better value stream and determine who will
need to do what by when to bring it into being.
Finally, the value stream leader needs to determine
what will constitute evidence that the performance
gap has been closed and collect the data to
demonstrate this. This exercise is, of course,
nothing but Dr. Deming's Plan-Do-Check-Act cycle
conducted repetitively by the responsible person,
ideally employing A3 analysis.

I'm not proposing a dramatic change in the organization
chart to reassign authority. Indeed, I've hardly ever
seen an organization improved by a "re-organization".
And I'm not suggesting the creation of a matrix
organization where everyone has a vertical and a
horizontal boss. Rather, during the transition to a
mature lean organization, someone with another job in
the organization needs to take on the role of
periodically (and quickly) auditing the horizontal flow
of value and bringing to the attention of everyone
touching the stream how the organization is performing
along that stream.

Note that periodic audits of processes within small
areas (for example, a continuous-flow work cell or a
materials replenishment process) are a well
established aspect of Toyota practices that I call
"standard management". So auditing across departments
and functions to examine value stream from end to end
is a scaling up of current best practice, not
something wholly new.

Auditing every value stream will expose problems with
the flow of value and contradictions in organizational
objectives. Indeed, it will expose many problems and
many contradictions. And that is precisely the point.
Most value streams currently have substantial
performance gaps, but the magnitude of the gap and the
precise causes are hard for anyone to see. (Hence the
confusion and resistance of many middle managers, who
are doing well on one set of objectives - asset
utilization, for example -- when lean methods require
another set.) And fixing the root causes of poor
performance will require someone - and quite possibly
everyone -- touching the stream to change their
behavior.

It follows that the responsible manager needs to engage
in a dialogue with the leaders of the functions and, if
necessary, with top level management to gain agreement
on who must do what by when to achieve a sustainable
leap in performance that will benefit the customer and
the organization. (One of the "whats" is likely to be
rethinking the metrics the "change resisting" middle
managers are being judged on.) The responsible person
then must periodically revisit the value stream, not
just to prevent regression but to continually move it
to a higher level of performance.

A special problem as we tackle this issue is that we
can't simply copy current-day Toyota. In the past
Toyota went through many iterations of how to solve
the problem of value stream management across the
organization. But today its mature organization relies
on policy management (hoshin kanri) at the macro level
and a cadre of line
managers auditing their areas at the micro level.
Because there is no confusion about objectives from top
to bottom and because managers have been taught from
the very beginning of their careers how to see the flow
of value under their management, no formally appointed
value stream managers are needed.

Other organizations - yours and mine for example! - are
different and what we need now are experiments with
value stream management methods. Whatever the final
answer, everyone in the Lean Community has a big stake
in our solving the sustainability problem. Otherwise,
the current surge of interest in lean -- driven by the
success of Toyota -- may become just another episode
in the long history of unsustainable management
improvement campaigns.

Best regards,
Jim

P.S. I will be tackling the sustainability issue in
detail in my presentation to the first Global Lean
Healthcare Summit in the United Kingdom June 25 and
26. I hope I will see many lean thinkers there who are
ready to tackle this issue with me. Go to www.leanuk.org
for details and to register.

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