Developing A Lean Culture by Gregg Miner

SCORE Business SystemsSustained Performance Through Engagement and Metrics

AME Champions MeetingMontreal, CanadaAugust 5 – 7, 2009

SCORE Business Systems

Developing a Lean Culture

Gregg MinerPresident & COO

SCORE Business Systems, LLC

SCORE Business Systems, LLC All Rights Reserved August 6, 2009


The most important part of your business is?


Your Culture

Your People


• 98%+ lean failure rate (Clifford Ransom)

• A member claimed anecdotal estimates of a 75% failure rate (LEI forum)

• 10-20% of leaders in a typical organization are unable or unwilling to make the lean conversion (TBM)

• 75% reported that they had made no or just some progress

toward their World Class manufacturing goals. (How to Prevent Lean Implementation Failures: 10 Reasons Why Failures Occur By: Larry Rubrich)

• It is estimated that 70% or more of companies that attempt to implement lean fail when using mainstream practices. (Univ of Kentucky)

Some Terrible Statistics!!!



Lean experts say:

•“Applying lean management principles exposes problems in traditional business systems, which often is threatening to middle managers in the problem areas,” said Chet Marchwinski, LEI communication director. “To get middle managers on board with the lean transformation, organizations must transform the metrics and behaviors for judging their performances.”

•“A true culture of continuous improvement” is what is required. Jeffery Liker has identified the primary problem most organizations face in implementing large scale change, weather it is Lean, Six Sigma or some other company wide initiative. What is called for is a new culture, a culture of continuous improvement, a culture that embraces change. The primary reason most companies fail in their Lean implementation is because they fail to successfully change the culture.

•Programs, by definition, end. Conversely, the ancient origin of the word philosophy (philosophía) means “love of knowledge” or “love of wisdom.” And true love, as the good book tells us, never ends. So, make sure your lean and/or six sigma activities are part of an overall business philosophy and not a flavor of the month program.



• Culture : the set of shared attitudes, values, goals, and practices that characterizes an institution or organization <a corporate culture focused on the bottom line>

• Behavior : the response of an individual, group, or species to its environment, the way in which something functions or operates

• Philosophy : the most basic beliefs, concepts, and attitudes of an individual or group

Webster’s Dictionary

Definitions



Definitions of Lean

• Toyota Production System, is about the systematic elimination of waste.

• An overall methodology that seeks to minimize the resources required for production by eliminating waste.

• Amalgamation of Just in Time, Kaizen, Kanban and Total Quality ideas leading towards zero paper, zero inventory, zero downtime, zero defects, and zero delays in design, manufacture and distribution.

• Lean manufacturing is a comprehensive term referring to manufacturing methodologies based on maximizing value and minimizing waste in the manufacturing process.

Misc definitions from websites



Some basic assumptions• Lean tools work• People will change when there is need

to change• Greater than 50% of change efforts fail

to meet expectations



Some basic conclusions• The tools don’t cause the failures• Willingness to change does not cause

failures

So what causes the failures???



Organizational Culture

?????????????????



So where does culture come from?

Remember the definition(Culture : the set of shared attitudes, values, goals, and practices that characterizes

an institution or organization <a corporate culture focused on the bottom line>)

Leaders



Another DefinitionLeadership - a : the office or position of a

leader b : capacity to lead c : the act or an instance of leading

NOT very helpful!

Webster’s



LEADERSHIP



Leaders…………………….

• Are Passionate about their job, company , community and their boss

• Treat others honorably and respectfully• Show enthusiasm and energy and energize others• Develop a strategy for their business and keep

refining it• Communicate the strategy• Keep learning – are teachable, non-defensive• Teach others• Motivate others• Encourage feedback



Leaders………………………

• Help others “invent” the right answer• Are accountable – hold others accountable• Praise when appropriate, coach as necessary• Take corrective action when appropriate• Are fair but tough• Do what they say they are going to do• Are consistent• Maintain disciplined financial structure• Manage by fact• Are entrepreneurial



Lee Cockrell, Executive Vice President Walt Disney World Resorts

Great Leader Strategies• Foster an inclusive environment• Design your organization structure for success, “Break

the Mold”• Make sure you have the right people in the right roles• Ensure that cast members are knowledgeable about their

roles



Great Leader Strategies (con’t)• Make dramatic leaps in guest service• Implement effect, structured processes for getting work

done• Explore, probe and know what is going on in your

organization and act upon the information• Actively observe and react to the performance of your

direct reports. Take time for recognition, coaching and counseling

• Expand and Act Upon Knowledge and Experience of the Best Service Available Anywhere!



Great Leader Strategies (con’t)• Partner Effectively and Successfully With Staff and Other

Cross-Functional Partners!• Demonstrate a Passionate, Professional Commitment to

Your Role!!!!!!!• Understand and Demonstrate Mastery of Business

Fundamentals!



Do you have:• Mission Statement – Check• Vision Statement – Check• Values – Check• Culture Statement - ??????????



Culture Statement• We will respect each other and treat each other with dignity

regardless of position within the company. The Golden Rule will extend to our customers, suppliers and our communities. Diversity will be embraced.

• We will make and keep commitments.• We will maintain the highest levels of integrity. We will not lie

or bend the truth. We will not allow non-compliance to any of the various regulations to which we must adhere.

• We will place the needs of the team above our own. We will do what is right regardless of our personal desires. We will do this while maintaining a balance in our lives.

• We will strive for excellence in everything we do. There are times we will fail but not because we didn’t give our best efforts.

An Example



Culture Statement (con’t)• We will be customer focused and will deliver superior value to

those we serve.• We will be entrepreneurial, pursuing opportunities to expand

our market presence, industrial relationships, products and services.

• We will continuously learn and grow as a team and as individuals. We will improve ourselves, our processes and our business.

• We will be good stewards. We will protect our assets, including our employees, our relationships and our reputation.

• We will come to work with hearts, minds and spirits engaged.• We will have fun winning.



Changing your organizational culture is the toughest task you will ever take on. Your organizational culture was formed over years of interaction between the participants in the organization. It can feel like pushing a rock uphill.



Organizational cultures form for a reason. Perhaps the current organizational culture matches the style and comfort zone of the company founder. Culture frequently echoes the prevailing management style. Since managers tend to hire people just like themselves, the established organizational culture is reinforced by new hires.



Organizational culture grows over time. People are comfortable with the current organizational culture. For people to consider culture change, usually a significant event must occur. An event that rocks their world such as flirting with bankruptcy, a significant loss of sales and customers, or losing a million dollars, might get people's attention.



Culture Change Facts• It WILL take time (years)• There will be bumps in the road• Must be driven from the top• Is communication driven• Requires training• Is a process!• Must be organization wide



Using Lean to change culture is great but…..

It Is Just An Enabler Not The Answer



The other work systems that must be changed include:

• Employee Promotions• Pay Practices• Performance Management• Employee Selection• Leadership Style• Communication (Yes it is a work system!)



So the question is how do leaders drive culture change?????



The answer???

Engagement!



“Our research continues to show awell-substantiated relationship existsbetween employee engagement – theextent to which employees arecommitted, believe in the values ofthe company, feel pride in working fortheir employer, and are motivated togo the extra mile – and businessresults.”– ISR Global Research DirectorPatrick Kulesa



Employers typically do just enough to ensure the majority of employees don’t leave; they train just enough, they offer just enough benefits, and they give just enough positive reinforcement. Is this the right way to approach employee loyalty?Consider these two startling facts:• Each year the average company loses 20-50% of its employee base– Bain & Company• Replacing a lost employee costs 150% of that person’s annual salary– Columbia University



In a Gallup Study19% are actively

disengaged (unhappy andspreading their discontent)

55% are not engaged (just putting in

time)

Only 26% of the US working population isengaged (loyal and

productive)

$350 billion per year in lost productivity

Every employer is wasting approximately 10% of their

payroll dollars on lost productivity due to

disengagementSCORE Business Systems, LLC All Rights

Reserved August 6, 2009


Engaged employees are more than satisfied and more than loyal; they are emotionally connected to you. They goout of their way to show their association with your company, they become an active promoter of your business, and supportyou during good and bad times. In the end, they make you more money.



To Increase Engagement

Jobs must have:

•Meaningfulness•Variety•Autonomy•Co-worker support

With job enrichment, employee performanceon prescribed tasks improves.Workers define their role more broadly—and willingly take on tasks outside theirformal job description.

To Enhance Commitment

Companies must provide employees with opportunities for personal development.

Increasing:

•Knowledge

•Skills

•Experience

•Expertise

Builds

Increasing:

•Self esteem

•Engagement

•Productivity

•Commitment



So the next question is how do you achieve the level of engagement where your employees are truly influencing your financial performance and customer satisfaction?



The primary driver is organizational alignment.



Alignment

Current State Future State Ideal State

Low Organizational Alignment High

Unaligned projects orprogram approach

Plan without communicationand employee engagement

Sustained journey with engaged and

empowered employees

Team Individual

Company



Organizational Alignment Basics• Starts with Vision, Mission, Values,

Culture• Follow up with Strategic Plan• Flowed down with Policy Deployment• Executed with Lean tools• Communicated with a Balanced

SCOREcard.SCORE Business Systems, LLC All Rights



Leadership

Mission/VisionFinancial Values Social/Evn. Values

Management Culture Partnership Culture

Win-Win

SharedRewards

BasicTrust

Recognition

Excellence

Listening

Competence

Respect

Mutual Influence

MutualAssistance

Joint Decisions

Long-term view

Aligned EngagementBy meeting mutual needs

Attitude Philosophy Behavior

Sustained Success

FOCUS HERE

TO GET HERE



• A balanced compensation plan, based upon valid measures of continuous improvement, true operational efficiency, teamwork and short-term results will promote the culture where lean initiatives can survive, thrive and produce tremendous results. (Gainsharing)

• The company vision must also serve as the roadmap to success through a business plan. The business plan must cascade the top-level strategies into division, department, and finally to individual responsibilities, action plans, measurable goals and timelines. (Strategic Planning)

• Another key element for success at lean methods is a company culture where the leadership and the management are participating members of the total team and where there is open and honest communication. (Communication Plan)

Microsoft Office PowerPoint 97-2003 Slide




Are these in your Lean transition Plan??????



What About?• Creativity training• Leadership training

– Performance reviews– Win-Win negotiating– Active Listening– Empowerment

• Problem SolvingSCORE Business Systems, LLC All Rights



HELP™

Human Engagement Lean Process



Implementation ProcessPart 1

HELP™



Implementation ProcessPart 2

HELP™



What is the Alternative to Employee Engagement?•Higher employee turnover - Employees leave, taking their reservoir of knowledge and experience to another workplace •Diminished performance - Competency of the workforce is reduced, at least short term, until new employees are trained •Lost training dollars - Time and money invested in training and development programs for departing workers is wasted •Lower morale - Remaining employees can be overburdened with new duties, in addition the unresolved issues that already prevent their full engagement

Defining Employee EngagementWhat is employee engagement exactly? AlphaMeasure defines employee engagement as the level of commitment and involvement an employee has towards their organization and its values.

How Can You Attain Employee Engagement?Listen to your employees and remember that this is a continuous process.



In conclusion,

•Value Stream Mapping•Kaizen•5S•TPM•Etc•Etc

Oh, wait we haven’t discussed…



We MUST remember these are the tools of execution, the enablers. It’s easy to have the hammer strike the nail, wrench turn the nut, screw driver turn the screw, but it takes time, planning, communication, and leadership to build a house!





Wrapping it all together, what do you get ……..……

• Improved Morale• Employee Engagement and Empowerment• Reduced Cost• Flexible Workforce• Improved Problem Solving Capability• Increased Velocity• Increased Production Capacity• Increased Retention• Increased Revenue • Increased Customer Satisfaction and Retention• Increased Profit, Cash Flow and Earnings



Let us start a cultural revolution for you!

SCORE Business Systems4113 Summer Brook Drive

Apex, NC 27539919-491-9157

www.scorebusinesssystems.comSCORE Business Systems, LLC All Rights


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