I find I spend a lot of time listening to people justify the things they do as being Value Added. And at times they get quite upset when I suggest we "call their customer to make sure that doing X is adding Value for them." I am told things like "the customer wouldn't understand why we have to do X so there's no point in even asking."
Really? Are you kidding me? Who are you Henry Ford with your black cars? (no offence to one of the great Lean innovators of all time).
Look I am not insensitive to what it feels like to have most of what you love to do classified as Waste. And I really wish there was a more "touchy-feely" word than Waste for things that are Non-Value Added. I have written about my firm's own Lean journey where we identified over 94% of what we loved to do as Waste. I admit it, it hurt. It crushed our souls. How could this be?
But more important than our own feelings we realized we were doing it because we had to. Anyone in the consulting business will tell you that consultants are the canaries in the coal mine. Long before things actually go bad, if there is even a hint of a downturn in the economy the first thing companies cut is their consulting budget. So months before the recession of 2008 we were already feeling the effects.
Facing a bleak revenue outlook we turned our Lean microscopes on our own internal process. And as I said it was not pretty. I started our Lean journey by telling my associates "look, we tell our clients that if they follow Lean they can take 40%, 50% and more in terms of costs and lead time out of their processes. So if we follow our own advice we should be able to take out far more than that."
The result was the development of a suite of products we call LeanOnMe that we deliver for approximately 10% of the cost of our original engagements. And furthermore we now eliminate virtually all of the complaints and frustrations clients have with consultants (I won't list them here, anyone reading this already knows).
My point is this, don't take Lean personally. You don't hear smokers vehemently defending cigarettes as being good for them. And diabetics don't get all upset when you suggest that cake might not be the most healthy choice they can make. Realizing what's Waste and what's not doesn't make it easy to change. But always keep in mind that the first step to improvement is admitting that you have a problem. "Hi my name is Kevin, and there is Waste in my process."
Friday, July 20, 2012
Monday, July 16, 2012
Lean Isn't...rocket science
Sometimes Lean can be a four letter word. But don't throw the baby out with the bath water.
These days everyone has an approach to Lean that they assure you is the "right" approach for your organisation. And in many cases they are right. But unless you are running Toyota where the Lean ideals are part of your DNA, simply having the right approach might not be enough.
Ultimately improving the performance of your organisation will involve getting your people to act differently. In order to act differently they will have to make different decisions. And in order to make different decisions they will have to think differently.
Most approaches to Change Management focus on getting people to act differently. The reason for this is very practical especially if you are a consultant. You are under pressure to show quick results. So you need to do anything in your power to get your clients to act differently even if it means bullying people or simply doing most of the work yourself.
Some approaches focus on "training" people to make different decisions. These usually involve taking people through carefully planned examples in an attempt to get them to learn what decisions they should make when they get back to their "real" world. The problem here is these 'perfect' situations never happen in the real world. And ultimately you have not helped people to think any differently.
But to truly leverage the power of "1 + 1 = 5" you want to get people to "think" differently. My high school physics teacher taught me the following two things:
Let me give you a practical example. My wife (pushes) says to me "we need to buy some new patio furniture. The stuff we have is old and worn out." I think to myself (like I always do) "sure its a little ratty, but its patio furniture, who cares. As long as it can support my weight, its all good. And even if it doesn't there's nothing you can't fix with some wire and duct tape, am I right?"
Later we are invited to a backyard party at the neighbours house. Upon entering their back yard I notice how nice everything looks. In particular their patio furniture which is brand new and just looks great.
The next morning I go out to our own back yard and look at our own furniture with a new perspective. "Maybe she is right" I think to myself. "We have had it for quite a while and we do use it a lot." I then go find my wife and (pull) suggest we check out the sale on patio furniture that was advertised in the flier.
Make no mistake about it. In either case we were going to end up with new patio furniture. Believe me when I say the laws of Behavioural Change physics do not apply in my house. But I think everyone can see how much more effective (sustainable) the change in my behaviour was by getting me to see my back yard (waste) with a new perspective.
A tactic I use with clients as well as myself is I let my customer decide what adds Value and what therefore is Waste. For example the next time this question comes up say to yourself "....ok let's call the customer and see what they think. Hello customer, we are sitting in a meeting trying to decide which phase of the Project Lifecycle we are in and we just want to make sure we are adding Value for you." You can imagine the confusion on the other end of the phone. All of a sudden when you do this things like status meetings, weekly reports, inventory, work in process, quality inspections, creating schedules, updating schedules, backing up files, driving to work, walking between meetings, reviewing scorecards, storing raw materials, approving purchase requisitions, status meetings, steering committee meetings, update meetings, safety meetings, and better than 90% of everything your organisation does adds no value to your customers. Talk about looking shabby.
If this sounds harsh then maybe you are right. If it sounds soul-crushing to discover that almost everything your organization does adds no Value to your customer, I hear you. We recently did an assessment of our firm's Value chain and in the cold, harsh light of Value as defined by our customer we found that we generously added value 5.6% of the time. That's the bad news. The good news is we took this new found insight and developed a far superior product that we can now deliver at a 10th the cost and a 10th the effort. Jealous? You should be.
These days everyone has an approach to Lean that they assure you is the "right" approach for your organisation. And in many cases they are right. But unless you are running Toyota where the Lean ideals are part of your DNA, simply having the right approach might not be enough.
Ultimately improving the performance of your organisation will involve getting your people to act differently. In order to act differently they will have to make different decisions. And in order to make different decisions they will have to think differently.
Most approaches to Change Management focus on getting people to act differently. The reason for this is very practical especially if you are a consultant. You are under pressure to show quick results. So you need to do anything in your power to get your clients to act differently even if it means bullying people or simply doing most of the work yourself.
Some approaches focus on "training" people to make different decisions. These usually involve taking people through carefully planned examples in an attempt to get them to learn what decisions they should make when they get back to their "real" world. The problem here is these 'perfect' situations never happen in the real world. And ultimately you have not helped people to think any differently.
But to truly leverage the power of "1 + 1 = 5" you want to get people to "think" differently. My high school physics teacher taught me the following two things:
- The force exerted on an object is equal to the objects mass multiplied by the acceleration or F=ma. Who cares unless you happen to be a rocket scientist.
- You can't push on a rope. Infinitely more useful to know.
Let me give you a practical example. My wife (pushes) says to me "we need to buy some new patio furniture. The stuff we have is old and worn out." I think to myself (like I always do) "sure its a little ratty, but its patio furniture, who cares. As long as it can support my weight, its all good. And even if it doesn't there's nothing you can't fix with some wire and duct tape, am I right?"
Later we are invited to a backyard party at the neighbours house. Upon entering their back yard I notice how nice everything looks. In particular their patio furniture which is brand new and just looks great.
The next morning I go out to our own back yard and look at our own furniture with a new perspective. "Maybe she is right" I think to myself. "We have had it for quite a while and we do use it a lot." I then go find my wife and (pull) suggest we check out the sale on patio furniture that was advertised in the flier.
Make no mistake about it. In either case we were going to end up with new patio furniture. Believe me when I say the laws of Behavioural Change physics do not apply in my house. But I think everyone can see how much more effective (sustainable) the change in my behaviour was by getting me to see my back yard (waste) with a new perspective.
A tactic I use with clients as well as myself is I let my customer decide what adds Value and what therefore is Waste. For example the next time this question comes up say to yourself "....ok let's call the customer and see what they think. Hello customer, we are sitting in a meeting trying to decide which phase of the Project Lifecycle we are in and we just want to make sure we are adding Value for you." You can imagine the confusion on the other end of the phone. All of a sudden when you do this things like status meetings, weekly reports, inventory, work in process, quality inspections, creating schedules, updating schedules, backing up files, driving to work, walking between meetings, reviewing scorecards, storing raw materials, approving purchase requisitions, status meetings, steering committee meetings, update meetings, safety meetings, and better than 90% of everything your organisation does adds no value to your customers. Talk about looking shabby.
If this sounds harsh then maybe you are right. If it sounds soul-crushing to discover that almost everything your organization does adds no Value to your customer, I hear you. We recently did an assessment of our firm's Value chain and in the cold, harsh light of Value as defined by our customer we found that we generously added value 5.6% of the time. That's the bad news. The good news is we took this new found insight and developed a far superior product that we can now deliver at a 10th the cost and a 10th the effort. Jealous? You should be.
Friday, July 6, 2012
Lean isn't.....a 'crash diet' to cut costs
A lot of people, including lean consultants, have the idea that if they implement Lean they will be able to cut costs. But this is exactly the wrong way to approach their process, or more correctly their Value Chain. In fact many initiatives calling themselves "Lean" are the organizational equivalent to starting a crash diet or buying the latest exercise equipment to lose weight.
If you approach an existing process with the intent of "cutting costs" there are many ways to do that and just as many consultants to help you along the way. And a lot of them even work...for a while. The problem is how do you know you aren't cutting a cost that is actually adding Value to your customer? Or even worse, cutting a cost that will end up increasing Waste to your customer? For example I had a client who prided themselves on aggressively cutting costs within their process. One particular way they found was to source a key component off-shore instead of having them produced locally. On a unit that retailed for $200 they were able to save an average of $12. On the surface that seems like a good thing.
Now flash forward several years and I am in a local building supply company looking to buy one of these units for my house. Because I was familiar with this client, and I always buy my client's products, I specifically asked if the store carried that product. I was told "well we used to. But we've had so many problems with units being returned because of faulty [off-shore component] that we switched suppliers." I was told that they only special order units from my client when people ask them to. He went on to tell me that if I was going to have them order from my former client that I should also order a replacement [off-shore component] that was locally manufactured since "the factory one wouldn't last a year." Did this company manage to cut its costs? The answer is yes. However doing so resulted in increasing Waste for their customer (returned units) and they ultimately lost that customer.
Getting back to the exercise analogy what this company did was the equivalent to going on a crash diet or buying the latest "get thin quick" gadget advertised on TV. You might have short term weight loss. But again any trainer will tell you that these benefits will be temporary at best. And you will very likely end up in worse shape than when you started.
So if Lean isn't cutting costs then what is it? If this company had approached its processes from a Lean perspective they would have started with Value as defined by the Voice of the Customer. And in doing so they would have probably learned that one of the things that their customers (the building supply companies, not homeowners) Value is the fact that their units last a long time, including the component that was re-sourced. With this definition of Value they never would have considered going to a lower quality replacement.
Similarly when you hire a trainer to help you "lose weight" a good trainer will instead help you focus on what you need to do in order to get healthy. With this broader perspective you will consider all aspects of your lifestyle (Value Chain) including diet, exercise, stress, environment, and so on. Sure the weight will come off. But the results will be much more sustainable and in the end more Valuable to you.
If you approach an existing process with the intent of "cutting costs" there are many ways to do that and just as many consultants to help you along the way. And a lot of them even work...for a while. The problem is how do you know you aren't cutting a cost that is actually adding Value to your customer? Or even worse, cutting a cost that will end up increasing Waste to your customer? For example I had a client who prided themselves on aggressively cutting costs within their process. One particular way they found was to source a key component off-shore instead of having them produced locally. On a unit that retailed for $200 they were able to save an average of $12. On the surface that seems like a good thing.
Now flash forward several years and I am in a local building supply company looking to buy one of these units for my house. Because I was familiar with this client, and I always buy my client's products, I specifically asked if the store carried that product. I was told "well we used to. But we've had so many problems with units being returned because of faulty [off-shore component] that we switched suppliers." I was told that they only special order units from my client when people ask them to. He went on to tell me that if I was going to have them order from my former client that I should also order a replacement [off-shore component] that was locally manufactured since "the factory one wouldn't last a year." Did this company manage to cut its costs? The answer is yes. However doing so resulted in increasing Waste for their customer (returned units) and they ultimately lost that customer.
Getting back to the exercise analogy what this company did was the equivalent to going on a crash diet or buying the latest "get thin quick" gadget advertised on TV. You might have short term weight loss. But again any trainer will tell you that these benefits will be temporary at best. And you will very likely end up in worse shape than when you started.
So if Lean isn't cutting costs then what is it? If this company had approached its processes from a Lean perspective they would have started with Value as defined by the Voice of the Customer. And in doing so they would have probably learned that one of the things that their customers (the building supply companies, not homeowners) Value is the fact that their units last a long time, including the component that was re-sourced. With this definition of Value they never would have considered going to a lower quality replacement.
Similarly when you hire a trainer to help you "lose weight" a good trainer will instead help you focus on what you need to do in order to get healthy. With this broader perspective you will consider all aspects of your lifestyle (Value Chain) including diet, exercise, stress, environment, and so on. Sure the weight will come off. But the results will be much more sustainable and in the end more Valuable to you.
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