“Improving quality whilst reducing costs - how Lean thinking can be applied in FE”.

Julie Tolley

1 May 2012

Exceptional people delivering exceptional results

This session is about....

How we can improve quality whilst reducing costs based on a philosophy that the right process would produce the right results

This session will look at how Lean thinking can be applied in FE.

Key drivers in FE and HE

Efficient and cost effective

servicesImproved quality

Increased learner / employer

satisfaction

Change failure should not be an option

Of the 70% of changes that fail, over 70% do so because people have not been sufficiently engaged 1

14% Other obstacles

14% Inadequate resourcesor budget

33%

Management behaviour not supportive of change

39%Employees resistant to change

1) http://instituteforperformancemanagement.org/Leadership%20Development.html

Changing people or changing operations?

Sources of Information:

1) National Audit Office, 2002. 2) The Chartered Institute for IT, 2008

Even the best managed projects and programmes often fail to create and sustain traction when introduced into the workplace

The common causes of project failure are: A lack of leadership, and risk management

1

A lack of effective engagement with stakeholders2

Failure to meet user expectations1

Difficulty for operational staff in relating the proposed change to their day to day work

2.

Therefore: User involvement, executive sponsorship a change ready culture and

clear requirements are prerequisites for success.

What is Lean?

Lean is a fundamentally different set of principles and assumptions about the most effective ways to manage and grow businesses

The key pioneers of Lean management thinking are: W.E.Deming (1900 – 1993) Taiichi Ohno (1912 – 1990) Shiego Shingo (1909 – 1990) (so Lean seems to be good for longevity too!)

"To successfully respond to the myriad of changes that shake the world, transformation into a new style of management is required. The route to take is what I call profound knowledge; knowledge for leadership of transformation.”

W.E. Deming (1993) The new economics for industry

But more importantly, what are the Lean principles?

Long term philosophy

•Base management decisions on a long-term philosophy even at the expense of short-term financial or political goals

The right process will produce the

right results•Create continuous process flow to bring problems to the surface•Use ‘pull’ systems to meet demand without delays and wasted capacity•Level out the workload•Build a culture of stopping to fix problems, to get quality right first time•Standardised tasks are the foundation for continuous improvement, and employee empowerment, but service processes need to be able absorb variety, so standardising quality of outcome is the ultimate goal•Use visual control so no problems are hidden•Use only reliable thoroughly tested technology that serves your people and processes

Add value to the organisation by

developing your people and partners• Grow leaders who

thoroughly understand the work, live the philosophy, and teach it to others

• Develop exceptional people and teams who follow the organisation’s philosophy

• Respect your extended network of partners and suppliers by challenging them and helping them improve

Continuously solving root problems drives

organisational learning

•Go and see for yourself to thoroughly understand the situation•Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly•Become a learning organisation through relentless reflection and continuous improvement

Adapted from Liker, J. (2004) “The Toyota Way”

But more importantly, what are the Lean principles?

How does a ‘systems thinking’ manager or culture differ?

Command & Control Systems thinking

Top down, hierarchy Perspective Outside in, system

Functional Design Demand, value, flow

Separated from work Design making Integrated with work

Output, target, budget Measurement Capability, variation: related to purpose

Contractual Attitude to customer What matters?

Contractual Attitude to supplier Co-operative

Manage people Role of manager Act on system

Control Ethos Learning

Reactive, projects Change Adaptive

Extrinsic Motivation Intrinsic

Seddon J. (2008) “Systems Thinking in the Public Sector” p70

Designed to be good for business as usual

Designed to be good for fire-fighting / crises

Core approach to real whole system improvement

Seddon J. (2008) “Systems Thinking in the Public Sector” p82

“Medieval man was a cog in a wheel he did not understand; modern man is a cog in a complicated system he thinks he understands.” Nassim Nicholas Taleb

How do you know if Lean is relevant? Process level:

Poor customer satisfaction, regular and / or costly complaints Costs going up with no obvious change in demand (‘We need more resources’) Long end to end times for the customer High levels of chasing, and internal hand-offs Low staff morale People not using IT properly following training

Operations manager level: Little understanding of rates of demand Managing to local SLAs / targets by function (or to no measures at all) Capacity (budget, FTE, space) based on historical levels with no reference to customer

demand levels Management meetings are ‘talking shops’ and real decisions are taken outside the meeting

(usually based on political power, rather than evidence) Complex business cases required to prove need for a project

Strategic change level: Can’t ‘salami slice’ any more, so need to close services / make cuts More change programmes live than senior managers can properly sponsor Poor operational buy-in to need for change prior to projects beginning ‘We need more project / programme management control / resource’

When can it be used?

Internal BPR to become

Leaner

Partnership and

collaboration

Outsourcing

Cost sharing groups

Capita Consulting’s approach

It doesn’t have to be called Lean to use Lean

Five stage approach

STAGE 1

DEFINESCOPE AND SELECTION

STAGE 3

DETAILED ANALYSIS

STAGE 4

SOLUTION DESIGN -

IMPROVEMENT

STAGE 2

HIGH LEVEL ASSESSMENT

AND MEASURING

Meetings (FoC) 3 – 10 DAYS4 – 6

WEEKS4 – 6 WEEKS

3 – 6 MONTHS

STAGE 5

IMPLEMENT AND CONTROL

Process improvement to operations strategy

The higher up the chain, the bigger the benefit and lower the total cost

Redesign service from core purpose and implement

Lean change management

Redesign management information, control and decision making flows

Targeted interventions, one process or service at a

time

And in the future: whole system pathway

Achieving whole system lean service improvement and capability

First 6 months Next 18 months Embedding and roll-out over years 2 to 5 Benefit

Ope

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ns 1. Proof of Concept (2

projects at risk)

2. Senior Manager Training inc: VFD,

A3-x, A3-I & commitments

3. Whole Service Framework & VoC

Performance System (current measures gap

analysis)

4. Value Stream cost, performance

and VFD detail

6. Service Improvement

Strategy A3-x v0.1 (in parallel)

7. PMO redesign and Critical Chain

training

10. Service Improvement

Strategy A3-x v0.2 (in series

(BP & A3-I / A3-x / BP & PMO)

8. OPM System Design and Install (Performance Team retrained to manage)

9a. Continuous Improvement Project Suite

Full Projects (Service > £1m)Internal Projects(Internal GB led)

Front Line Tactical(Manager Led)

5. Internal Green Belt programme

cohorts 1-3 &Manager Training

13. Optimisation of design and use of, for example:Sharepoint / knowledge management tools; front line systems;

SAP / financial systems; GIS; web-front ends (self-service portals) (Capital or training)

8a, 9a, 10a. Manager and

team admin Excel training

5a, 8a. Performance team

& GB Minitab & MindManager

training

Full Projects (Service > £1m)Internal Projects(Internal GB led)

Front Line Tactical(Manager Led)

9b. Continuous Improvement Project Suite

11. Internal Green Belt programme cohorts 4 to X &

Manager Training

12. Performance management system ICT infrastructure e.g. SfN or AOM?

14. Value stream based

organisation design (end-to-

end accountability)

15. Value stream accounting

systems

Decision Makingprocessredesign

A3-i PMO Priority Projects

5%-40% of total effort for each

service in scope

20%-60% of total

management effort

Fewer projects with

greater impact

ICT and processes

aligned and service

outcome built in

We can engage at a range of levels

Capita Consulting solution components

Sectoral transformation

Institutional transformation

Operational optimisation

Transforming the sector through BPO, outsourcing and shared services.

Delivering more efficient and effective operations through Lean and BPR.

Transforming institutions through merger, partnering and re-structuring.

Where to go for more information

Initial Core Texts Core Principles

Freedom from Command and Control (John Seddon) The Toyota Way (Jeffry Liker) Out of the Crisis (W.E. Deming) The Goal (Eliyahu Goldratt)

Tools and process The Lean Service Toolbox (John Bicheno)

Historical context The Machine that Changed the World (Womak &

Jones) Books by Shiego Shingo & Taiichi Ohno

Operations management and strategic lean Understanding Variation (Donald Wheeler) Hoshin Kanri for the Lean Enterprise (Thomas

Jackson) Specialist:

Project management Critical Chain (Eliyahu Goldratt)

ICT Lean IT ( Steven Bell & Michael Orzen)

Accounting Practical Lean Accounting (Brian Maskell & Bruce

Baggaley) Facilitation

Open Space Technology (Harrison Owen) Clean Language (Wendy Sullivan & Judy Rees)

Free non-book resources iTunes (free podcasts):

The Systems Thinking Review Lean Summit 2010 Profit through process (Six Sigma IQ) And many others…

Useful (free) clips Advice UK

http://www.adviceuk.org.uk/home (Advice is Changing)

London Thames Gateway http://www.londongateway.com/

(Visualisation) Deming Library excerpt

http://www.youtube.com/watch?v=GHvnIm9UEoQ

Trabant Quality Control (not Lean ) http://www.youtube.com/watch?v=mIAYxWC

XF8A

Thank You

Julie Tolley

Tel: 0207 901 0000  Mobile: 07584 704269Email: julie.tolley@capita.co.uk  www.capita.co.uk/consulting

1 May 2012

Exceptional people delivering exceptional results