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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”
8
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!
15
Define Your PurposeImprove the Work, Develop the People
Leadership Styles
16
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?
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