Global Lean Healthcare SummitKenilworth, Warwickshire, UK

June 25, 2007

Lean Leadership & ManagementJames P. Womack, Chairman, Lean Enterprise Institute

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Every Organization Needs to Address:• Purpose – Providing the value the customer wants so

the organization can prosper.

Without clarity of purpose, everything else is difficult or impossible.

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Every Organization Need to Address• Process – The series of actions/steps that must be

performed properly in the proper sequence at the proper time to create the value the customer seeks.

All value is the result of some process:

Primary: Product and process development, fulfillment from order through transformation to delivery, and support through the product’s life cycle

Support: Hiring, training, accounting, etc.

Ideal process: Every step is valuable, capable, available, adequate & flexible. (Capable + available = stable.)

Ideal process: Steps are flowing (or pulled) and leveled.

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Every Organization Needs to Address:

• People – To engage everyone touching the value creating processes (value streams) in seeing, sustaining, and improving them.

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The Management Challenge

• Define the purpose &

• Specify the processes for achieving the purpose

• While aligning & engaging the people touching the processes.

Note: Most organizations – including Toyota -- are functional & vertical; horizontal management of end-to-end processes is usually subordinate and weak.

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The Contribution of Lean ThinkingObservation that organizations perform better when they:

• Specify value (customer purpose) by end-to-end value streams flowing horizontally across the organization.

• Analyze each value stream to remove the wasted activities and the instabilities (muda, mura & muri.)

• Place the remaining activities in continuous flow.

• Pull materials (needed goods, services, information, and the product itself) from previous steps when flow is not possible. (Never push!)

• Engage everyone touching the value stream in continually seeking perfection.

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In Healthcare • Value/purpose = Prevention, diagnosis, treatment &

maintenance of medical conditions, with best outcomes at lowest costs?

• Value stream = Patient pathways through cycles of intervention for given conditions (plus secondary, support pathways for materials and information)?

• Flow = Moving the patient as quickly as possible from the start to finish of each cycle/pathway?

• Pull = Sending clear signals about availability to the previous step, when patients, materials, and information cannot flow continuously?

• Perfection = Continually analyzing the value of every pathway and steadily improving every step?

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Most Organizations Struggle

• Purpose – solving the customer’s problems while addressing the organization’s needs -- is not clearly defined.

• Processes (value streams) are not clearly specified and visible to everyone.

• People are not engaged in optimizing the whole value stream rather than their point in a vertical organization.

In particular: No one is responsible for each value stream, to clarify its purpose, evaluate its process, and engage the people touching the stream to improve it.

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Most Organizations Struggle

• The problem is typically not the lack of tools – 5S, visual control boards, poka-yoke, quick changeovers of equipment, andon, kanban, concurrent design, target costing…even value stream maps!

• Instead, it’s a lack of:

Lean leadership

&

Lean management.

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Leadership Versus Management• Lean leadership is about:

Transforming organizations and value streams from “mass” to “lean” (through kaikaku.)

• Lean management is about:

Sustaining value streams (with standard management) &

Improving/perfecting organizations and value streams once transformed (through kaizen.)

• The same person can be a leader or a manager in different circumstances; at the highest level in changing the management system and at lower levels in taking responsibility for individual value streams.

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Why Are Lean Leadership &Lean Management So Hard?• We have a long (100 year) history of mass

production leadership and management.

• It fits comfortably with our “principles first” way of thinking and teaching.

• Its architect was Alfred Sloan at General Motors, with subsequent elaborations by other firms, notably General Electric.

• Its logic contrasts with lean leadership and lean management on every dimension.

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The Sloan School of Management

• Clear grants of authority, for organizational units and activities within units (verticals.)

• Planning and direction from the top down.

• Bosses provide answers; to be implemented by subordinates.

• Line managers judged on results -- often financial -- at the end of reporting periods.

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The Sloan School of Management

• Generalist managers, rotated frequently.

• Decisions made far from the point of value creation, by analyzing data.

• Problem solving and improvement conducted by staffs and through programs.

• Dramatic change achieved in a crisis through heroic, “do what I say” leaders.

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The Lean Alternative

• In the 1940s, 1950s, and 1960s Toyota pioneered a series of management innovations.

• Based on an “experience first” (genchi genbutsu) way of thinking.

• Organized into a system by Eiji Toyoda.

• To create Lean Management.

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The Toyoda School of Management• Planning and macro direction start at the top, but with

multiple feedback loops down the organization.

• Bosses ask questions; subordinates discover answers after careful investigation through intense dialogue.

• Line managers focus on operating and improving clearly specified processes.

• Managers try to make abnormalities instantly visible; implement countermeasures while seeking root causes.

• Good results emerge from a focus on the details of the process every day (and even every minute!) rather than a focus on results at the end of the reporting period.

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The Toyoda School of Management• Responsibility for horizontal processes supersedes

authority for vertical organizational units. (E.g., Toyota Chief Engineer.)

• Decisions made as close to the point of value creation as possible using direct observation; turning “data” into “facts”.

• Problem solving and improvement conducted mostly by highly knowledgeable line managers, in problem solving loops with superiors and subordinates.

• Steady improvement, through lean management, reduces need for heroic leadership to address crises. (“Fewer hunters; more farmers.”)

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The Key Tools of Lean Management• Strategy deployment/policy management/hoshin

kanri (pick your term) at the top of the organization – to set direction (and metrics), prioritize actions, and de-select actions that are currently beyond resources.

• A3 analysis for line managers in the middle of the organization to justify actions, solve problems, and transform value streams.

• Standard management (combined with standard work) for managers along each value stream to sustain and improve each process.

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Strategy Deployment• You can see more from the bridge of the ship about the

external world.

• Senior management really can create value from the bridge!

• What’s hardest to see from the bridge is the engine room, where the value is created that powers the ship!

• Strategy deployment tries to link the bridge with the engine room through a series to dialogue loops in which managers at a higher level with greater external visibility ask managers at a lower level with more detailed knowledge of value creating processes to solve problems.

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A3 Analysis

• A simple tool for solving problems, justifying proposed actions, and making plans.

• Describes the problem.

• Characterizes the current condition causing the problem.

• Proposes a future condition solving the problem.

• Describes who must do what when to create and sustain the future condition.

• Determines what evidence will show the problem has been permanently solved.

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Standard Management• Natural tendency of any process is to regress.

• Every process needs some responsible person to continually monitor its status.

• Standard management includes a set of tools for making sure that each process is sustained and improved.

Visual controls to show at a glance whether a process is operating normally or abnormally.

Standard work for every action affecting the process.

Periodic audits to check the visual controls and standard work.

Periodic kaizen to improve the process in light of new external conditions or internal problems.

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The Risk in Using Lean Tools

• If these are merely tools -- used without a lean thought process -- they are unlikely to have much effect.

• Those trained in the “do what I say” school of management are particularly susceptible.

• Improvement “programs” depend heavily on lean tools but can’t be sustained without lean management using a lean thought process.

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Current-State Value Stream as a Tool

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Future-State Value Stream as a Tool

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A3 As a Tool Versus a Thought Process

• The latest “lean” management technique.

• Wonderful way to operationalize Dr. Deming’s Plan-Do-Check-Act cycle.

• Produces little or no result without the thought process behind it.

• Must be a means of dialogue and joint problem solving involving the more experienced manager asking questions and the less experienced manager or team reporting to the manager, who try to verify the questions and find the answers.

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Sample A3

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Transition: Sloan to Toyoda; Mass to Lean• Ideally starts with the senior management.

Strategy deployment as a way to see the big picture, decide on a path of march, and change the way senior managers think and manage!

• Often more practical to start with specific value streams (e.g., “model lines”, “model wards”, “breakthrough exercises”, “demonstration projects”, etc.)Someone needs to take responsibility for identifying the problem, tracing it to the current condition, envisioning a better future state, and organizing the transformation.This is lean leadership in action!

• Toyota seems to have started at the bottom by teaching all managers problem solving and creating stability!

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Predictable Consequence

• As value streams are analyzed and “leaned”, contradictions will emerge in the organization between horizontal and vertical.

Vertical managers of functions/departments will have different metrics and objectives from overseers of horizontal processes!

Surfacing of contradictions is good! A key principle of lean thinking is to make problems visible. “No problem is problem.”

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First Moment of Truth• When top managers need to reconcile horizontal and

vertical.

Example: Is asset utilization more important than patient velocity in healthcare?

Example: Are departmental metrics more important than end-to-end metrics for patient pathways?

The consequence of failing to reconcile contradictions will be regression of horizontal processes to their previous level of performance.

No amount of heroic leadership at the top of the value stream level will make a long-term difference.

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Second Moment of Truth• When top managers decide whether lean is a

program or a new way of leading and managing.

Will every process have a permanent “owner” who continually asks about its value, assesses the current condition, envisions a better condition, determines who must do what when to achieve that better condition, and collects the evidence that it has been achieved?

Will every manager be taught and held to standard management in which abnormalities in processes are instantly visible and standard work is always adhered to by means of frequent audits asking probing questions?

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The Prize from the Transition

• Fewer heroic leaders (firefighters).

• More steady state (lean) managers.

• More smoothly flowing value streams at lower cost with higher quality with higher responsiveness with less hassle and anxiety for customers.

• More-engaged, less-stressed employees at every level who learn to answer questions -- through management by science -- rather just following orders.

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The Challenge in Healthcare

• There is no “Toyota” to copy in healthcare management.

• Healthcare organizations are amongst the world’s most complex, even though patient pathways are often simple.

• Healthcare management is divided, and often contested, among doctors, nurses, and administrators.

Healthcare managers are usually asset optimizers.

Doctors are usually point optimizers.

Nurses grasp the need for process management but have not, to date, had acknowledgement of the importance of this mission or a rigorous management method.

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The Opportunity of This Moment• There is widespread agreement that healthcare faces

large problems.

• There is widespread agreement that healthcare organizations must change.

• If no one knows the answers – and no one does --what’s needed now is a lot of experiments!

• But mainly at the management & system level, not at the point intervention level of most “lean” initiatives to date.

• The more that members of the healthcare community document and share their experiments with lean leadership and lean management, the greater the opportunity for rapid, dramatic improvement!