Driving the wrong KPI – An efficient way to the inefficiency

I was hearing a story for few days now. No, this is not about the end of the world. This is about how a lean movement has created unnecessary issues in an organization. This particular organization, like most of the organizations opting in for lean, had high hopes about its lean movement. They have started implementing lean years back, and have seen some improvements to their processes. They have formed a central team which will be driving lean initiatives across its facilities. This central team will form the strategy and the local teams in each of the sub units will be implementing lean in their respective areas. Sounds great, isn’t it?

But there was a problem. They were not getting the results they wanted. People started their own “lean” movements within sub units. Now each sub unit is performing in their own way. Although sub units themselves may gain some advantage by doing this, for an outside observer, it is clear that organization was losing in totality. Sub units are not working in unison to solve the bigger issues now. But they focus only on their small area to make it efficient. Processes are getting sub optimized.
 
Why is this happening? Well, there might be more than one reason. But one very important reason is the way lean is implemented and driven. Each organization sub unit is made to compete against each other. Instead of coming up with a better solution in totality, each organizational element is unconsciously encouraged to do better than other, even if that meant a negative outcome at the organizational level. Each sub unit now wants to do better than other. So they stopped sharing their methods with the others. They create their own systems, which becomes unmanageable over a period of time. Even the so called best “Lean” plant may not be doing good in the big picture.

What is the take away from this story? Well you have to think critically about what you are driving through your lean initiatives. You will have to define your goals and then start thinking about methods of driving lean, especially in the case of a mature organization. Bigger the organization is, difficult it becomes to achieve the set objectives. But if managed properly and driven with a good vision and control, lean can benefit the organization in totality. If you do not drive the correct KPIs, you will be very efficient, in creating inefficiencies.

Kaizen in plain English

Kaizen or continuous improvement is a buzz word these days. But what is it? Is it something complex? No, not at all. I am trying to explain it in the simplest possible way today.

If you do not improve what you are doing, your competition will pass you sooner or later. So it is a given that any organization should improve themselves. But how an organization should do this?

Continuous improvement suggests you systematically improve on things you are currently doing. This will, over a period of time, allow you to take your organization forward. It is like a wheel which turns little by little, but continuously, which takes the organization forward.

Lean organization plans the way forward, act based on the plan, doing improvements to the system. Then they check the output against the expected results. Then they act according to the outcome. If the outcome is not aligned with the expected outcome, corrective actions will be taken. In any case the cycle will continue driving the organization forward in the correct direction.

Probably the main difference between traditional programs of innovation and Kaizen activity is the ability to check and correct the course on the go. This is possible because unlike other programs, Kaizen happens in small steps. You can measure the results after every step and you will be able to correct the changes after every step. This will make sure not only you are going forward, but you are going in the correct direction, which is very important.

Any tool we associate with lean can be a Kaizen tool too, when applied with the Kaizen mindset. This is true for a strategic level tool like Hoshin Charts or a simple cause and effect diagram.

Kaizen tells organizations to improve at a steady phase, but continuously, which is a guaranteed formula for winning.

Cost of automation – a lean thought

You might know by now, I am not for cutting-edge technology. I believe technology is only a tool. We have to use it when it is required, in correct dose just as we would take medicine. If we take too much, it will not good for our health.

Today organizations drive their automation initiatives hard, expecting benefits like cost savings, improved quality and reliability. I have to admit, sometimes, automation is the only solution. But is it the case always?

One important observation I have made when I work with people is that, they are completely blind to the cost of automation. Some people introduce systems so complex, maintaining the system itself will cost them more. Sometimes these systems can hinder their quality and reliability too. All these are obviously, things automation wanted to remove from their systems.

One of the main automation systems is the documentation system. People use complex ERPs, computer systems and so on, only to increase their IT costs without realizing. From the cost point of view they might end up paying much more, although there can be improvements in data consistency and reliability.

As in anything to use any automation system optimally, we have to balance pros and cons. Automation for the sake of automating will just heart the organization.

I am sure you have good experience in this. Please leave your comments below. If you agree with me, please LIKE this by clicking the LIKE button below.

Lean Story : eBook - Free Download

Many of my readers requested me to release the story as a eBook so that they can read it easily. Some requested me to make this story Kindle readable. I thought both these are fair requests. Hence I am releasing the PDF version of the Lean Story "Lean, frustrations and wins". This version is Kindle optimized, in case if you want to read on your Kindle. Please find the link to download below. Please leave your comments and Likes.

http://learnleanblog.com/Lean%20Stories%20Lean%20frustrations%20and%20wins.pdf

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Lean Stories: Lean, frustrations and wins - Part 3

(This is the part 3 of a 3 part series. Please read the part 1 and part 2 of this story here.)

Everyone has left the workplace. It is kind of scary to be in this place once everyone leaves and most of the lights are turned off. Alex talks to me in his office. Alex wants to talk to me after everyone has left. So I slowly walk to his room. Alex is still sitting in his chair, staring at the computer. He is preparing some documents. He stops to talk to me. For him it seems to be the most important thing at the moment. I tell him how productive last few days were. I show him my cause and effect diagram. He looks little nervous. He looks at it for about two minutes, before turning to me. He was not surprised. His eyes tell me, “I knew all these. But I wanted the verification from a third party”.

“This is great work” he tells me. It is amazing how you have captured, processed and simplified causes to this issue. I am really thrilled. I know he was not that much thrilled. Although he wants to feel that way, I believe something was stopping him. I can surely say it is the feeling of guilt, which blocks his enthusiasm. He knows he could have done better. He knows he should never have fired Joe citing non adherence to lean as a cause. He knows he never wanted to hear much from his employees. He knows if he did get their involvement, this process would have gone much better. But he asks me “Mr. Miyagi what shall we do about this?” I waited for a moment and asked him to take a photocopy of my cause and effect diagram. He goes to the photocopier and takes a copy of the diagram. I tear the page where I drew my diagram. I give it to Alex, saying “Mr. Alex, keep this with you. Just have a look at this tomorrow morning. Do not try doing anything. Just leave it. Let your brain do the work for you. You will come with the answer to your own question. I will meet you next Monday to hear the answer.”

“Why did you tear the page off your book? I could have kept the photocopy”, tells me Alex. I tell him, “this in color. Color images are easy to memorize”.  He smiles and puts the diagram in his bag. We both leave the office in a moment. We go to have a coffee and talk for about an hour. Alex then drops me home. We are off to enjoy the weekend.

For me the weakened is slower than it used to be. When I was working full time, weekends seems to fly. I thought Saturdays and Sundays had few hours less than the usual working day. But it is all different now. Weekend seems much longer. But I still like them. I talk to Miki, for hours and hours. My grandchildren show up online. I talk to them for hours. I eat a very slow lunch and a dinner. We go shopping together. Some days we go to a movie. Some days we just sit on a park bench and watch young and old, rich and poor, happy and sad pass by. It makes us appreciate what we have got. I believe I am living the perfect life.

It is 5.30 am. I am up. I welcome the day and the week by saying “Good Morning Monday”. Miki was already up. She is doing her business in kitchen. I take the steps to downstairs. I feel good energy and sense of comfort. I had a nice breakfast and by 7.45 I am out to see Alex in his office. My appointment is at 8.30. Today I am in no rush. I slowly get in to a cab. Tell driver the place where I want to go. While he is taking me there, I wonder what might be these busy people might be thinking now. There are hundreds of thousands out there on the roads. All of them are rushing to their work. But I wonder how many of them really rush to their workplace mentally. Let alone rushing, how many of them might have left their minds elsewhere. How many people might be saying to themselves, “Ohh, it is a Monday again”. When I really think about it, I have never felt this way, except once or twice in my life. I always loved what I was doing. Or better to say, I did what I liked, always. So I was happy always. I never got huge salaries in the beginning, and I couldn’t afford many luxuries my friend could. Some of my friends thought I was nuts.  But I knew money is not everything. Unlike all the others who knew that, I start living that life. I found joy and peace of mind.

While I am feeling good about myself, I am near the Alex’s place. I can see his factory nearing. I looked at my clock. It is 8.25 am. I am five minutes early.

I am walking to Alex’s office. He is in his seat. He is turning on his computer. He gave me a big good morning just as he saw me. Good Morning Mr. Alex, I reply him. Without wasting a second, I asked him, what answers to your questions are. He was not surprised, not panicked and did not hesitated even for a moment. He answered, “Mr. Miyagi, you were correct. I have made all those mistakes. Whatever on the cause and effect diagram are the causes to the issue. I think we can correct them, step by step obviously. I will start making the simple changes first. I am thinking of starting with improving the worker involvement in the lean process. For the moment I think we should keep our consultants too. It is too early for us to lose them. But what I thought of doing is to form an internal lean team. People from every department will have a representative in this team. They will identify, brainstorm and come up with the best solutions. But I will have the ability to bypass all their decisions in case I believe their decision may not be aligned with the long term objectives of this business”.

Alex did not leave a single space for me to disturb him. He was doing all the talking, I was just listening. I am really pleased and happy about the solutions he has thought of. I especially like the idea of creating a lean team from the members of the business. Mr. Alex, great, you have thought through the issue really smartly. I agree with all your ideas. “Mr. Miyagi, I thought you might not agree with the bit me bypassing the team in case I wanted to.” Alex tells me. I do think it is important to guide teams to the correct decisions. 

Sometimes, a team may not be able to see the vision you have in your mind as clearly as you do. Sometimes a team may select the easy path. In these cases, you may have to exercise your power, even if it meant overriding the team decision. But one advises. Do not exercise this immediately. Let the team to mature. Alex agrees. “Yes, absolutely” he says.

So how are we going to setup the team? “I will ask the department managers to come for a meeting and then will decide on the candidates from each department. I am thinking about giving the team members a 5% increase in the salary as a measure to motivate them to put the extra effort” Alex tells me.

It makes me to think. Alex, I think increase in their salary is not a good idea. When this team gets money for driving lean, it separates them from the team their representing. Others in their departments will see these people just like they see the external consultants. In addition it will start some salary increment related discomforts among the other members too. As the cause and effect diagram says, people think they are not getting their share of lean benefits. Last thing you will need is a small set of people involved in lean to get more money. I speak continuously. Alex keeps listening.

“This is what age does to people. NO. NO, I did not mean in a negative way Mr. Miyagi. You have tons of experience. I believe you are right. Paying them might do more harm than good. Thank you for pointing out that to me.” So how many people do you think you are going to have in your team? “About 12” replied Alex immediately. Mr. Alex, it is not good. Too many people in a team can cause problems. It is too difficult to communicate and come to conclusions easily. You will have to see a way of reducing the team to about 7 people.

“That is going to be tuff. I have to include all the senior VPs and a representative from each department. ” Said Alex. Well I understand your point. But how about creating two teams? One to set the strategic directions. This team will be your senior VPs and you obviously. Then there will be an operational team. This team will make your goals come true. How does that sound? “Mr. Miyagi, you are a master at this. How can I refuse your suggestions? Let this be that way.” I am about to give my last piece of advice for the day to Alex. Mr. Alex, do not appoint your teams today. Leave it to the next week. Meanwhile do your homework. Think about what exactly your team should do. I know you have a very good overall idea. But you have to be specific when you communicate with your team. Think about what are the powers you can give that team. You see a team without any formal form of power might not be able to perform well. This will lead to frustrations among the team members. You will have to think about how this will affect your day to day operations. Think through them. And prepare to pitch your idea. Practice before you talk to your team. Try to talk to the hearts of the people, while giving some logics for their brains to work on”. “I get the point” says Alex. I am thinking in the same lines. He added.

I am done for the day. One of the advantages of being a consultant is that you can define your working day. This may not apply for everyone. But in my case it surely is. I left Alex and heading back home for lunch. Alex, a guy with lots of business experience and lean knowledge can pull this out on his own. I am sure of it.

Today is Tuesday. I am up early as usual. I am thinking about my schedule for the day. Then I am going through the day to day routine. My phone starts ringing. It is Alex. He is going to speak to his team today. He thought he had enough thinking done already. He thinks he has to finish the first step fast. OK, I tell him. I am little nervous about the speed at which he is traveling. But if Alex is confident, then it should be fine. At the end of the day it is his business. So I speak to Alex for some time. Alex invites me to the team creation activity. I explain him to why I should not be there. And he understands and proceeds.

Few hours later I get another call from Alex. He was very satisfied about how things went. He tells me that everything has gone according to the plan. Both of us are really pleased.

A month went by. My activity planner tells me, I have to do some following up with Alex. Although Alex has spoken to me in-between, I have to do a formal study with Alex. That is how I know exactly everything is working fine. So I meet Alex and have a chat with him. I asked him the obvious question “Mr. Alex, how is your business doing? How is lean going on?” Alex replies me with a smile in his face. Everything is going good Mr. Miyagi. People are involved much more now. They are starting to feel lean is beneficial for them too. This probably is the most important thing that has happened after the meeting we had. In addition, our two teams are working well. We had some good suggestions. We implemented few of them. Things are going good. Alex is speaking with joy and pride. I feel it through his words and expressions. I am happy to hear how things are going. But I have to complete my job. So I tell Alex, I will stay observe the work for the entire day today just like I did before. Alex couldn’t understand why I should do it. But he did not object my request.

I am in the factory floor. Observing people and the work they do. I have a new notebook to record all these. But I have my old notebook with me too. This will help me to compare the before and after statuses to evaluate the improvements taken place.

I can notice few new charts replacing the stuff which was there already. These new boards are much more meaningful I believe. They are simple directions, only one or two of them, put down in big bold letters with measurable outcomes. For an example one such board says “Improve flow, Reduce Stoppages. We will clean our machines 3 times every day”. Unlike chats overwhelm people with so much of data; these simple and clear directions are much more effective.

I can observe some minor changes to the layouts in the factory. I see some empty spaces which I like. I was having casual chats with people around the factory floor and management. They all tell me more or less the same thing. They all tell me they start to like the concepts of lean. They tell me that they start to see some of the benefits already. So they tell me they are motivated by this. I think they are honest opinions, but I have to validate them before I accept them. All the consultants should do some sort of a validation to get to a correct conclusion, I believe.

I am taking lunch with one of the workers in the factory. This person is about 35 years old and used to talk to me when I was here a month ago.  His name is Andrew. Andrew was happy with lean developments too.  He says “Alex, made us understand the value of the lean practices. We have to build good quality stuff with fewer resources just to in the game. If we do not do this, we will be history. So I see why we should do lean and I see how we are going to do it. Importantly I know what our role is in the process”. Andrew tells his honest opinion about the lean movement and he talks with some passion, which is a really good sign. I casually asked him “what improvements you think make this process more efficient?” he thought for a moment. “I believe everything is going fine. But if I would like to see some improvements in the HR department and finance departments, you know people who are servicing us. It is not streamlined properly with the lean movement as I can see it. Probably these departments too have to start using the lean tools. We can get our work done quickly” said Andrew. I was very nervous when Andrew started talking saying he thinks everything is fine. I have seen many people tell the same in my lean career. Most of the times this happens when shop floor people stop thinking, thinking the thinking is the business of the bosses. This is a lean killer. When people stop thinking, lean stops. But I was happy as soon as he said “BUT”. BUT is a good word in lean, especially when it is used in connection with ideas. It always leads to new ideas, new opinions. I am happy to see Andrew has an eye on the big picture. I agree in principle, we should drive for a lean enterprise not for a lean manufacturing movement. Meanwhile, I have heard this cry when the lean is at its infant stage at any organization.

Lean by very nature comes first to the manufacturing and then spreads to the other departments. So people in manufacturing see others are not following lean. So they complain. But that is nothing wrong with it. As a consultant my job is to note all these concerns and direct actions to address them. But as a consultant I have seen the value of not trying to address all the concerns at once, and sometimes not at all. All the cries are not relevant to the process. While all the concerns are valid, when it comes to action, you have to be very careful what to prioritize, and what to neglect, obviously with valid reasons. Trying to satisfy everyone with a concern will just create issues in the system. And it is a waste.

At the end of the day, I have a good idea about the results of the actions taken by Alex. I believe they are in general very fruitful. People start to feel lean. They are starting to live it. But obviously, there are few areas where things can improve. One of them was how lean is implemented. Yes, now I believe is the time to think about how lean is implemented.

I see Alex after everyone left the office. Alex seems to be relaxed and happy. So am I. Mr. Alex, you are doing great in implementing lean.  I can see the improvement in front of my eyes. I am really happy about it. “Mr. Miyagi, I cannot explain in words how much it means to me. I worked so hard to make this happen. You were the magic formula. I owe all the success to you”, words are pouring out with passion and joy from Alex.  I am really happy to see it. I kept silent for a while, and tell him, I am very happy about it. And I start to talk about pull system concept in lean.

Alex understands the pull concept inside out. He speaks with great knowledge. After a little pause, I ask him, “Mr. Alex, are you following pull system in your work?” Alex looks confused. He stands up and shows me the Kanban cards and small trays which carry semi-finished goods on the factory floor, pointing to them through his glass cubical. “Mr. Miyagi, obviously we do follow pull, see the Kanban system we have in place. It has reduced our WIP considerably. I am sure you notice it yourself too” he says. Yes Mr. Alex, I see the improvement. I am very happy about it. But my question was, “Are you following pull?”. “What do you mean? I am not clear. I do not work in the factory floor?” Alex tells me. His voice has changed. His facial expressions show me some discomfort and dissatisfaction. I tell him, “Mr. Alex, you are not a factory floor worker. But you are a working on an important role here. You are the big boss of the organization. You are a very important person. So you too have to practice pull”. “I understand all that. Please tell me what you want to tell me. I am losing my patience” Alex tells me. I really can see him losing patience. So I add, Alex, you are still pushing lean to your workers. They are happy still, but soon they will start to rebel against it. You have to make lean implementation a pull. Users have to come and tell you lean improvements they need and how to improve the process etc. In current status if you stop pushing lean today, I am sure people will forget lean in a month or so. So this model of lean implementation will not sustain in long run.

“Mr. Miyagi, we came up with the teams to drive these functions here, one month ago, with your advice. Now just after a month, you are coming here and telling me a completely a different story” says Alex with a higher tone. His finger is pointing to me, like to say I am the culprit. This meeting is becoming hot. But I want not to lose my cool. I tell Alex, “Mr. Alex, yes, we did all that. Those moves have started to pay dividend, aren’t they? What I am telling you is not that”, “Then what the **** are you telling me to do?” for the first time in the conversation Alex burst out, and I can perfectly understand why. I have taken him through a journey and now I tell him that he needs to do something different. This should make him unhappy. But he has not clearly understood what I want to tell him. Probably my not so good English is playing a part here. Or it may be the way I put it. That’s all history.

“Mr. Alex, I perfectly understand your frustration. I believe you have not understood what I want to tell you. I am basically telling you to get out from the day to day affairs and let users themselves run the lean initiatives. In case if they need any direction or approval from you, let them come to you. Yes, you should have an eye on the progress and you should align everything to what you want to achieve. But you should do it passively when it comes to operational level stuff. Let your VPs and other management with the users to navigate their way through. You have other things to consider now. How to get your suppliers involved in the lean movement and how you can build a competitive advantage over your competition and so on.” there is a long pause. I did not want break it. It took a minute, before finally Alex broke the silence. With much a calm voice he starts talking. “Mr. Miyagi. I am sorry. I should have never spoken to you that way. Anyway, what you are suggesting is not doable. If I lose control.. How can that possible..”  I tell him “Mr. Alex, I have been through much tough situations in my career. I have no problems. But let me remind you, you are not going to lose control at your level. You will never be able to control everything anyway. Your team needs some freedom. Give some freedom to them to make their decisions and improvements and you will see how much of a freedom and value you get in return. Just trust me and do it.” Alex thinks about a moment. OK, let’s see, he says. We discussed about how to make the changes. And then Alex, prioritized things he has to do in order to facilitate this change. We agreed to meet in a month to check the progress.

I am on my way home. I am more than happy with the outcome. I am sure Alex will pull it off.