Lean Strategy:the next Frontier

[Applause] we've been talking a lot about change absolutely things are changing customers are more informed more empowered more knowledgeable more vocal employees in the next generation are much more technically literate than we are and are no longer willing to accept doing mindless work that was designed by others they want to be part of creating their own work and creating their own working together environment with others in organizing organizations and we're on the threshold I think of really exploring the full implications of the materials and the communications technologies and we still don't know quite what those outcomes are going to be so we're in a time of exploration at a time where we could waste a tremendous amount of money on the wrong choices so it's a time also where the environment is becoming a much much more visible consequence of our excellent actions and so I would argue that in such a time we can no longer forget people focusing on technology and exploiting those technical opportunities is absolutely right but ignoring people is a big mistake because it's people that manage and cope with and respond to change so ultimately lean is a pointer is a direction is a signal is an inspiration to a people centric way of organizing that I believe is the organizational framework we need for the future for this time of rapid change so the real promise of lean it's still to be realized we still have to work on it it's not fixed because it's a way of thinking and it's a set of ideas and ways of looking at the world that translate into very different actions that have very different consequences so actually lean is a people centric management system for our time and for the future sure it has a history sure we can look back and see why our misconceptions of lean early on were often wrong but now I think we can begin to see the deeper and the deeper thought process that underlines lean and it's about people centric management systems that are focused on solving user needs that are focused and built about creating meaningful work for all of our employees not just a few and it's one in which in a time of experimentation and the danger of spending too much money on the wrong things it's a time when we can also save a tremendous amount of time of capital and resources and therefore minimize our impact on the environment and at its core lean is a learning system as we've heard and it builds a capability throughout the entire organization of learning faster than our competitors so lean is actually builds the infrastructure the mental models the ways of working together that create the conditions for continuous innovation rather than spectacular a few spectacular big leaps so that continuous innovation I think is the actual consequence of a different way of thinking but our challenge our real challenge it is is if we continue to see lean or what people describe as lean through traditional management thinking and simply adopt tools of lean and try and implement them with the traditional thinking we will we shouldn't be surprised if we don't just get traditional results only if the thinking changes will those tools those techniques those perspectives generate the results that Lean promises so after working with a group of CEOs who went through many lean programs of their own and ultimately came to the conclusion they had to lean lean leads their own lean transformations actively personally we gradually be able to distill what it takes to actually lead Lee and that has been the missing element in our understanding of deep understanding of Lee and we discover that lean is actually a strategy lean is a strategy of building dynamic gains from finding and solving the right problems it's not about buying best practice and optimizing it it's about engaging everybody in continuous improvement continuous accelerating improvements focused on solving the right problems that's essentially what real strategy is about and we discovered too that leading a lean people centric organization is all about learning and I think we've all come to that conclusion ourselves but the missing piece also was well how do you translate learning into bottom-line results if learning is simply nice to have fun to do it's not going to convince the finance traitors or the boards of directors or your shareholders we can translate learning onto the bottom line so that's our challenge and these are the obstacles to that way of thinking that we need to create in the future we need to learn our way in to think our way into a new way of acting so what's the problem and you might reflect on whether you see these characteristics in your organization first of all as we're taught in business schools by Michael Porter and others strategy is what the board and the CEO need to think about and it's all about positioning in marketplaces choices of the right technologies how you've compete against competitors and that's completely separate if you watch michael Porter's videos it's completely separate from execution execution is all about just buying best practice finding the right smart people the right locations the lowest cost solutions and it's all about just buying that best practice and it's not the job of CEOs and the board and leaders so that's interesting you just buy best practice and you force it in and so what happens of course is that managers have been leaders have been taught it is not their job to be actively engaged in the execution in operations in delivery and in making products that's best practice that they commissioned others to implement for them so the consequence is that leaders have been taught it's not their job to be actively leading change at the frontline whether it's the design office or whether it's the customer interface or whether it's the production or service delivery point so not surprisingly leaders have not been involved they have been traditionally used to asking outside or internal experts to solve their problems for them that's what they've been taught to do surprise-surprise lean takes a very different view second we discover that actually traditional accounting measure the accounting systems that we use to make decisions actually can't see the problems that are facing the processes and the frontline everyday and can't see the problems but also can't track the improvements to solve those problems they are invisible in the accounting systems so we have to fundamentally change the way we think about constructing the metrics that define the gaps that tracks the physical changes that will close those gaps that will lead to bottom-line results so we fundamentally have to rethink the metrics by which we make decisions and we've been used to processes and systems designed by experts and that is how we think about the world leaders Commission experts to solve their problems and design processes better processes and line management and middle management job is essentially making sure that those people free processes their designs that anybody can basically operate them are complied with so it's a kind of policeman role and that's the source of great deal of frustration but also means the focus is on static optimization with no learning that is no longer acceptable to the workforce of the future quite apart from the fact that it actually kills and stifles learning which is what we want silos and rule-based bureaucracies I've said many times and I've been unpopular in saying this but most of the wastes the expensive waste in organizations is not at the frontline its of headquarters it's bright people fighting powerpoint wars over departmental and silo budgets you may not have that in your organization but I suspect that you do and the truth is that bureaucracy was a tremendous innovation the question is German innovation largely but actually it is so powerful in restricting and in con and resisting change that we need to find new we need never going to get rid of it but we need to find countermeasures to counter the inherent resistance of silos and bureaucracies to change the consequence of not being able to see what's really going on in the organization because the numbers don't tell you a leadership that is disengaged and silos fighting for budgets is that every management team has long lists I've seen them everywhere 60 to 80 projects on their on their to-do lists and that simply tells me that they cannot they don't have the confidence that any of those projects are necessarily going to succeed and so therefore launching a lot of projects some of them might succeed hopefully but we don't know which ones and we don't know where so a lean organization is much better able to see the fun mental problems define the improvement directions and to focus efforts on closing the gaps but the deepest source of problems with traditional thinking is top-down is traditional top-down decision-making very interesting traditional top-down decision-making is the core of the way we look at the world and all of those things I've enumerated are consequences of that top-down decision-making so we need to challenge all of these including the way we make decisions so let's start there top-down decision-making you all do it we all do it is either the opinion of the most highly paid person in the room or it's the result of things they've heard at conferences detailed analysis of data of past data and so on that creates a vision for where the organization needs to go so it's about defining what it is the organization needs to do and then constructing a plan and then constructing a plan of action in detail with targets and roll out on all the rest of it and then it's given over to those to execute in the organization to drive it through the organization and then somehow to deal with the consequences there are always many consequences because there's military strategists tell you no plan survives the first contact with the enemy events are always different planning is everything plans are worthless as Eisenhower said many many years ago so however much we plan we don't know how reality is going to turn out and we don't know really what the consequences are going to be so it's actually a bankrupt and fundamentally flawed decision-making process it's called jumping to solutions it's fast thinking if you've understood that and follow tournaments slow and fast thinking it's jumping to solutions with really minimal evidence of what's really going on because the bureaucracy hides the evidence because it doesn't want to be blamed so it's fundamentally flawed and it's inherently wasteful and it's very interesting that in the military the experience time and time again has been as Eisenhower said plans are everything but planning it's worthless so sorry plans planning is everything but plans are worthless and so there is a movement in the military strategists field a lot of different experiments going on to actually lead from the ground up as they call it developing the frontline in getting building the capabilities on the frontline to deal with whatever circumstances they find at the time quickly without having to go right back up the organization of develop a plan do the right thing at the right time so it's about empowering upskilling the frontline and they call it leader leading from the ground up that sounds a more promising way of thinking and indeed that is very much what Lean Thinking thought about Lean Thinking starts not in the office rethinking starts at the frontline I'm going to in deeper detail in a minute and it's about leaders finding not just the immediate problems but the underlying causes of those medium of those immediate problems and then being able to very clearly define that the gap that needs to be closed and the improvement direction that needs to be followed and that needs to be articulated in a way that everyone in the organization can see how they will contribute how they can contribute to making this improvement direction happen you construct the right experiments carry out PDCA problems classic problem solving this is problem finding which is the step before problem solving we know how important problem solving is to frame the problems to frame the experiments to learn from the experiments and then gradually over time to form lasting solutions that tackle the root causes this is actually the path of the sensei all of those leaders found they needed a synthesis somebody who'd seen it before either as a CEO or as a very deep experience lean lean practitioner who could lead their thought process because this is an individual process of learning for leaders just as much it is for the teams in the rest of the organization and the sensei is basically helping the leaders learn this different way of thinking that as I said the military core learning from the ground up leading from the ground up so this is a very different way of thinking instead of the big bang we need a solution a new solution go away and design it and implement it which we will continue to do don't but don't get me wrong but this is a different think thought process which is let us look at what we've got now let us engage people in improving that and by doing that we will see the improvement directions that we need to follow in the future and we can build the capabilities throughout the organisation to make those changes happen and fight the silo-based bureaucracies let's take those one at a time so finding the right problems you can only find these problems by going to the front line going to the design office going to the customer interface going to the production site going to the warehouse going to distribution it's only at the front line that you see these from the real problems that prevent people implementing the systems that you've imposed the you commissioned and they are broken that don't always work because multiple complex systems have a probability of failure and there will always be interruptions and people will be dealing with us how can you learn from the way people deal with those interruptions and by doing that you're showing a committee a commitment to learning not only your learning but also their learning but the real real value of leaders going in helping and supporting the frontline in learning is that leader begins to see actually the underlying problems that often have been the result of their decisions that they need to address to remove these as obstacles in the future so leaders learn by helping others learn and leaders learn to see the underlying problems and then see the capabilities that are necessary to solve those problems and maybe challenging some of their previous management practices in doing so so finding the right problems is fundamental starting point and setting improvement directions rather than setting targets let us set improvement directions that's so on so 50% reduction in defects per year a 50% reduction in lead time etc etc what is the rate of change that we want to set and communicate that in a way that everyone can see how they can contribute to it and then translate those into physical changes into the product design into the process design into the customer interaction that will deliver system-wide results being very clear what the business case is for those actions improve quality faster time-to-market and innovation is the core of growing sales reducing the total the time and the increasing the flow from the time you from order to cash saves cash what are you going to do with that cash repeat Kaizen reduces the cost base of your existing production and it frees up space for new products for this growing complexity of products that we've heard about earlier so frees up capital saves capital by using our existing resources so Fiat business directions clear business consequences and now we see when we get to the third stage how do we design the experiments to be done to make those in physical changes happen this is what the Toyota Production system is all about it's not a production system it's a learning system it's a way of framing learning in an organization and most of us have forgotten the third the TPS house the tier of Production system house in a nutshell on the right hand side the judoka pillar is all about deepening individual technical and organizational capability for doing the work making it visual tracking quality at source etc et-cetera on the left side you have the ability then to create a rhythm to flow things at the rate pulled by the customer and so on that's the collaborative skills that are necessary you can't have one without the other and neither of them makes sense without changing visibly changing the offer to the customer and the foundation on which that is built is stable teams is employees capturing their knowledge their improvements in standards and building using those standards as a baseline for improvements for proper scientific improvements classic PVC a problem solving is we used to and the underpinning of that is confidence between management and the teams to support them challenge them but to provide all the resources they need to complete their task every day there's a tremendous depth to this it is the core of this learning process I urge you to study it again because this is what helps to frame the learning for every single action we take not just to solve that problem but to think to learn how to think to solve the next problem and the next problem and the next problem so very interesting TPS is a learning system and it always has been and we've thought about it as a bunch of tools and we realized too that experiment after experiment sometimes works sometimes doesn't we learn from those experiments and gradually through repeated experiments we capture reusable knowledge knowledge that works in standards and capability building is learning to solve tomorrow's problems not just solving today's problems because you can end up solving today's problems again and again and again capability building is that each team learning to solve tomorrow's problems which means it's not about optimizing or rolling out best practice which is the traditional way we've thought about deploying implementing lean it's about building capabilities to solve tomorrow's problem the sensei is not interested in your solution the sensei is interested in what did you learn from going through that problem-solving process that should tell us something so those this is a very different way of thinking about leadership and way of thinking about learning and a way of thinking about building knowledge through learning that translates into business results so to slice to summarize it's about recognizing that processes increasingly complex processes increasingly automated fine by me absolutely fine are going to be a set of activities each with their own probability of failure but the more integrated they are the more the consequences of those failures will be felt across the system those integrated systems are always going to reply rely on human decision-making and judgment to cope with cope with situations that we're not expected to occur so instead of designing people free processes we need to design processes where judgment can balance the the freeing up of resources through automation so people centric processes bear that in mind and bear in mind this challenges fundamentally changes the role of frontline and light and lean and line management because it's line management's task no longer to police people doing the work that was designed by others line management is there to build capabilities through daily practice and learning by doing and leaders role and this is not easy for a society that respects knowledge and authority as much as you do in Germany it's about leading by asking questions rather than telling people what to do telling people what to do takes away their responsibility for learning and thinking about and proposing solutions to a problem so it's a very different Socratic way of thinking and leading and this respect for people which is a absolute half of theaters approach is on the one hand about challenging them to to to do more to achieve more to learn more and it's also about supporting them are doing that and finally as I said at the beginning the true benefit business benefit of lean is continuous innovation we are now in a situation where in every industry we're moving away from big bang projects occasionally launching a project a new product or a new service we're now much more in this scale-up phase where we learn to improve day by day our products and services learn from the digital world they are constantly releasing updates every day not every six months as we used to for big SAP systems they're doing it every day improving modules all the time so this continuous experimentation and feedback from users is the world we live in now and the world we were living in the future building those communication links with those with users is going to be fundamental to building continuous innovation so that's the loop with the customer as we go back through the organization we have been very poor accumulating the experience from the continuous improvement both in our production operations and design operations in our supply base and translating those into the next generation product so how do we accumulate the Kaizen experience add it to the technical experience of those seeking new technology how do we feed that into the next generation products phenomenal potential that we are missing and how do we do this on a continually fast attack time so the TAC time of releasing as I've already said in digital technology has gone from the what the yearly release daily release to daily release what is the TAC time for releasing new improvements to your products and services I think it will ultimately be daily but it's certainly not every few years in two elements to making this work are absolutely critical one is the judgment for each iteration what needs to change and what stays the same otherwise engineers want to redesign everything every time of course they do but the real judgment is what is the necessary change for this next iteration that we're going to experiment with and get the feedback from and what are we not changed so it's the judgment about and it's a personal judgment built out of years of experience and has to be embodied in a person Turner case the chief engineer who makes that judgment as to what goes forward into the next generation product supported by a parallel evolution of the technical capabilities on which he he or she can draw supported by rather than dominated by so the voice of the customer voice of the product voice of the service is now strongly represented and driving continuous improvement and technology is absolutely including digital technology supporting it so if we build if we see this as a system and we see this as a learning system all the way up and down and we see it translating giving that learning back to the customer then we've begun to understand what the true potential of Lee so we've tried to capture this different approach to leading a decision making in a book we've just publically just published in the United States and in it's just in English in Europe a different approach to decision making finding the right problems framing improvement directions supporting learning leading from the ground up as the strategists have taught us that's the subject of our latest book and I don't think this is the end of the lean story I think it is another big piece that was missing I think other people from the next generation in the digital generation they're going to add a lot more to the lean story for the future so Lean Thinking evolves but it has deep roots going way back as an alternative way of making decisions and leading organizations so that's my contribution I hope that thinking leads you to a different way of doing best of luck thank you very much indeed Lean Startup was inspired by by lien by an understanding of lean applied to how do you get going in this startup business the issue that the startup doesn't of course address is how do you scale up and what I'm talking about is largely the scale up for capability and what is what is really unique about Toyota's ability to innovate is not only do they develop the hybrid car and about hydrogen car and so on but they are able to iterate and scale that knowledge and reduce the costs very quickly much faster than other industries so the startup and the scale-up actually go hand in hand so scout startup just just describes a piece of the process of how to break thinking how to try new things how to begin that experimentation with users but doesn't address the issues that we have more experience with of how do we build continuous learning to rapidly scale up what works out of those experiments so actually they fit hand to hand another question but you never stop experimenting with customers so the startup mentality never goes away but it just describes piece of the story sorry go on here's the night I have visited many many a number of us of midst at middle strand organizations led by the third generation not the generation that had the technical inspiration that led to the founding of the company to start with but often a generation that is hiring managers from elsewhere to manage the business for them and so while you're right there is an intuitive connection between the technical inspiration from the leaders and the clothes working together with their technical teams and their production teams the danger is as midlist and organizations grow they lose that focus and they start adopting traditional management thinking that that's the way they can they can grow so in a sense it's a warning but it's also in the other sense making clear the people side of the success of those little stand enterprises not just the technology because sure the technology is what defined them but actually what made them work in the early stages was a very good personal connection between the founder and the and the people who work for them they create an organization where people really felt engaged and felt identified with the product the danger is that gets lost when you hire professional managers I've seen this time and time again and it's very sad I was in one Midland organization a year ago at their prize giving day for lean projects they had lots and lots of great lean projects all over the place and the issue for them was the senior management that they had hired two or three years away from retirement didn't really want to change things too much just wanted their pension they were not interested in really connecting these projects together so they had the knowledge and you could put your arms around this company and it was a good company's no question that technology is still good but you could see it was just about to turn off all of that enthusiasm that they generated in all those projects because they were not building them they were not connecting them they were seen as just because they've got everybody's doing lean so they needed to do lean to and it was just so sad so I was fairly blunt and afterwards the owner who is no longer involved in the company but he's a the board thanked me for being so Frank so that's the problem all I could do was uncover the problem not provide the solution but you're right this is in a sense it's going back to basics but in a in a map much more clear cognitive way rather than intuitive instinctive way which was how the missile stent was so strong so that's why it's very important then not only the big companies the Daimler and the eros Airbus and so on think about this and they certainly need to but that's so what why it's so important particularly in this country for the middle Suntech to think this through - because actually it's hard it's easier to repair in the middle stamp company but they're used to dominating the technology in their marketplace and you know preparing a next product for the next exhibition in in a year's time whereas the technology is moving on and they're going to have to go much faster so it's very good question and very important and lean has an important answer to those questions that you can sign them ok so if you want to buy them the

Channel: Lean Enterprise Academy

Views: 2,847

Keywords: Lean, Lean Thinking, Lean Solutions, Lean Enterprise Academy, Lean Enterprise Institute, LEA, Daniel Jones, Toyota, TPS, Toyota Production System, Transformation, Quality, Engineering, Manufacturing, Continuous Improvement, Process Excellence, Process Improvement, PEX, OPEX, Strategy, Michael Balle, Orest Fiume, tom ehrenfeld, Jaques Chaize, Lean Strategy, lean management, leadership, learning, problem solving, people-centric, continuous innovation, decision-making

Id: WnFUMyPU8wY

Length: 45min 42sec (2742 seconds)

Published: Fri Jul 14 2017