NC State of Business

Investing in a new piece of equipment, losing that piece of equipment, and then purchasing the same piece of equipment again is wasteful and economically unwise. Repeating this cycle of purchase, loss and re-purchase could make a company less competitive and in tough economic times make the difference between staying in business or not. An improvement to this situation is to keep track of the equipment, maintain it in top working condition and to create simple methods of preventing malfunctions.

The same situation occurs with employee knowledge and expertise. Organizations that regularly lose employee knowledge and skills - through turnover, transfer or simply non use - are less competitive compared than those that keep track of and maintain employee knowledge and skills in top working condition. Employees are the day to day working brain of your organization and the accumulated skill and experience of your employees is a primary source of economic competitiveness.

How does an organization keep track of, maintain and build on employee knowledge and skill? Some organizations have this as part of their DNA but others may need memory aids. There is an effective memory aid method of documenting and routinizing employee knowledge and skill that can be easily maintained and improved upon. The method is called standardized work. Standardized work is created by employees studying, analyzing and documenting their work steps. The standardized work document becomes the quality checking mechanism for existing employees and the training manual for new employees. Over time the standardized work becomes the physical memory of the organization.

Standardized work has other benefits that enhance an organization’s economic stability, especially when it follows an analysis of purpose and targets such as the “A3” method. The A3 method documents the reasoning process (as in a law case) and the subsequent goals and targets established for an organization, department or individual. A3 strategies, targets and results document the organizational history of strategies and their results in the same way a scientific experiment and results are documented in a published scholarly paper.

When a strategy, method or work method has been established as successful, a standardized work document is prepared. The standardized work document in turn makes deviations from the standard very apparent and easily investigated. Note that deviation does not mean defect; deviation means “does not meet target” and may mean improvement. Problem solving methods are used to investigate deviations and create a new working standard. The final benefit of the standardized work is that the new method is documented and all further training is performed with the new knowledge now captured in the standardized work document.

Employees may leave or be transferred but their skills and knowledge go into the standardized work “library of knowledge” of the organization and become the baseline for new employees. Future employees will begin with the skills and knowledge of the standardized work process and build upon them, not recreate them. In this way employee skills and knowledge are cumulative and are not lost and rebuilt over and over again.

The methods of “A3” thinking and planning, standardizing work and problem solving are intertwined as an organizational system of improvement. This improvement system applies to all levels of employees in organizations including senior executives, professionals and front line employees. Organizations that use this system will enhance their competitiveness and economic security.

If you want to learn more, check out any of these great resources.

A3 Thinking and Planning -

Getting the Right Things Done by Pascal Dennis http://www.lean.org/Library/BookDetails.cfm?LibraryBookId=24

Managing to Learn by John Shook
http://www.lean.org/Bookstore/ProductDetails.cfm?SelectedProductID=246

Understanding A3 Thinking by Durward Sobek and Art Smalley
http://www.amazon.com/Understanding-A3-Thinking-Component-Management/dp/1563273608/ref=sr_1_1?ie=UTF8&s=books&qid=1232968947&sr=8-1

A3 Problem Solving in Healthcare by Cindy Jimmerson
http://www.ies.ncsu.edu/events/eventieshopdetail.cfm?pid=699

Standardized Work –

TWI (Training Within Industry) - This site has links to original reports and materials and to organizations that are actively promoting and training TWI methods. http://trainingwithinindustry.net/links.html

Industry Week Article on TWI http://www.industryweek.com/ReadArticle.aspx?ArticleID=13838

Note – TWI is rebirth of workplace training methods developed in WWII. Some credit TWI with the creation of later versions of standardized work and kaizen methods of improvement.

Employee Problem Solving

Hickory Chair Case Study
http://www.ies.ncsu.edu/_library/docs/whitepapers/HickoryChair.cfm?rid=179&webplid=23

How Toyota Turns Workers Into Problem Solvers – Interview with Dr. Steven Spear
http://hbswk.hbs.edu/item/3512.html

It was a Sunday afternoon in late August and James decided to drive by his new post, just to look at the idle plant. James was transferring in as the new plant manager of the "flagship" facility of his company, and Monday would be his first day. He noticed the grass needed mowing, and he wondered what else might have been unattended in the faility, particularily their "company famous" use of the corporate production system.
This facility had been and it remained one of the company leaders in metric performance, but James again wondered was it close to where it could or in fact should be. Monday was less than 24 hours away.

In a previous post on this blog, I proposed that sustaining lean initatives was key and I was later asked HOW! How can any implementation be effective and sustained and to address James's question be close to where it could or should be in system effectiveness. My experience relative to effective cost reductions and being able to sustain improvements now goes back almost 40 years, and I have found 10 bullet points to be keys to sustainability and more real tangible progress toward perfection. They are as follows:
1. Top Management Commitment: This means they fully support the effort with their time and resources on a personal basis, (you put your money where your hear is). I am talking about the CEO, President of the Organization, VP's, Plant Managers/Directords, First line Supervisors.
2. Individual Accountability: Lean performance and progress has to be a key performance metric just like safety, quality, and cost performance, in that it is used to guage individual performance and advancement probability.
3. Training: Training must be across the board, and has to start at the top of the organization, followed by middle management. Most of the training emphasis should be about developing a Culture of Change. Tool training is important as well, but that comes second to the Culture.
4. Incremental, Small & Sustained Changes: They should not try and make sweeping changes too fast. It is key to maintain the gains. The importance of 5S efforts for example is really more on creating the discipline to sustain rather than just the actual individual project house keeping improvement.
5. Gain the Trust: The effort has to be "grass roots", and it must be aimed at gaining the trust of all employees by being creditable and treating everyone with respect!
6. Focused on the Right Things: Lean needs to be part of the overall strategic plan, with all the dots connected. Individuals must have goals that support the lean initiative, but these goals must be MEASURABLE things that THEY can influence and be measured on, in other words PERSONAL.
7: Utilizes Common Sense: This means what it says, but the "common sense" utilizes data, not opinions and feelings to move the effort.
8: Involve Everyone: Every employee has a stake in the effort and the goal is to utilize the brain power of the entire organization. If a company or health care facility has 500 employees, then there needs to be a structured effort to pull all 500 into the process.
9: Cross Functional Kaizen Teams: These teams working on well planned 3 to 4 day projects can help not only to improve performance, but they offer an excellent opportunity to train and involve everyone if the events are properly managed.
10. Hard Work: There is no substitute for hard work and persistence. Lean can not be a surface project, but must come from the gut of an organization.

James couldn't know from a shaggy lawn what the true current state of the facility production system really was. It may have been fine, but he knew from his lean training it was not perfect and room for improvement definitely existed.

A clearly defined method that embodies the 10 bullet points can help build a better improvement system. Continuous improvement means what it says, it is CONTINUOUS.
Monday is coming.

Okay, the New Year's parties have been over for a week and we're back to ... what, exactly? This time last year, we knew the election was coming; now, the new administration is coming. This time last year the stock market was riding high; now, many of us are poorer than we were a year ago because of how far the market has fallen.

We're starting off 2009 with a lot of questions we didn't have when 2008 started.

• - How hard will this year be?
• - How long will this recession last, and how quickly will our economy recover?
• - What can we do, individually and together, to protect our families, our businesses and our investments?

With all the uncertainties around us, it seems the standard New Year's resolutions may not apply. Often we resolve to improve ourselves in some way, possibly by exercising more or eating better, only to find that our resolve isn't as strong as we'd like it to be. Sometimes we resolve to improve the world around us, maybe by supporting a charity or volunteering for a worthy cause. Those are still worthy things, but from the tone of recent news reports I get the impression that some people may be resolving only to survive the year.

I think that's the wrong attitude. This year will test our resolve, yes, but that's no reason to lower our expectations all the way to bare survival. We should be resolving to thrive -- not to follow the crowd, but to lead it, not to hope for the markets to improve but to dig in and do what we can to push them upward.

As the IES Executive Director, I've been thinking about what we at IES can do to go beyond "business as usual" to help our clients bull their way through this stagnant economy. We don't have a magic wand to wave to get funding or reduce healthcare costs or anything dramatic like that, and almost every client we touch reports significant savings or job retention -- so I think it comes down to how can we do better at what we already do well, and still remain good stewards of our clients' and the taxpayers' resources.

So I've decided on three resolutions for IES:

1. We will reduce our operating costs as much as we can and still provide excellent service to our clients. We'll reduce our travel, postpone buying new computers or equipment, and that sort of thing before we impact our people. In fact, if things get too hard I'll ask for volunteers to take short furloughs before I think about downsizing.
2. We will develop at least one small-scale, fast, super-low-cost on-site service based on lean or Six Sigma principles to offer clients quick results at minimal cost. (Thanks to Steve Swain, our automobile industry expert, for that idea.)
3. We will look for new opportunities to serve more North Carolina industries -- and IES will become a meaningful presence in at least one underserved industry sector this year.

I know I can't do these things alone, and I'm glad I don't have to: I have a great team of dedicated people at IES and I'm proud of every one of them. And together, we're going to make it a good year.

And I hope you will, too.

It’s that time of year again, when resolutions are made for the coming year. They include: losing weight, saving more money, quitting smoking, working out more often, and spending more time with loved ones, to name just a few. I have read that anywhere from 92% to 97% of resolutions are not kept. We start out with good intentions but end up failing to meet our goals. This is also true of Lean implementation in business. Why do resolutions fail, and how does Lean Thinking parallel these failures? In my eyes, there are common themes of lack of support, unreasonable expectations, a poor game plan, inadequate coaching, and a general lack of discipline in forming habits.

Accountability/Support. When embarking on your resolution, you should find someone who can keep you accountable. You know, ask the tough questions…”how is your diet?”…”did you get out and run today?". We often show more discipline when we know that someone has an interest in what we’re trying to achieve, and isn’t afraid to hold us up to our commitments. It also helps to get support as we achieve small victories. In a lean environment, process audits and leadership follow-ups are part of the culture, and associates see these as improvement opportunities, not a time to be defensive. This culture also recognizes when people make a difference in improving the workplace.

Reasonable Goals. If you make a resolution, you need realistic goals. If you want to lose weight, you can’t expect to lose 20 pounds in a week, but maybe 1-2 per week is attainable. You probably aren’t going to be able to quit smoking overnight. In lean thinking, incremental, continuous improvement is important. You start in one area and keep growing from there. Toyota has been at it for 50 years or so now (and still moving forward). They couldn’t change everybody’s habits in every area in a week, a month, or even a year. It takes time, and setting unrealistic goals can dampen interest and enthusiasm for the effort.

Trainers and Coaches. Most people who have a fitness trainer or personal coach will see results more quickly, often because the coach has developed a plan for the person to follow. In the same way, businesses that have lean mentors (either internally or from outside, like our IES staff) can see more consistent and sustained improvement due to a well thought-out plan and availability to monitor and coach along the way.

Habit. Resolutions often fail because they have not been given enough time to become a habit. The first rainy day, we skip our run. After a few days of healthy eating, we are tempted by a big piece of cake or a second helping of barbecue. Habits don’t form overnight. It’s the same in the lean world. In one of my past jobs, we used to strongly encourage teams to follow the “21-day rule”…try using the system for 3 straight weeks before making any more changes or, even worse, reverting back to the old way. Habits take time.

Keep these thoughts in mind as you begin your New Year’s resolutions and travel the lean road. I’ll try to heed my own advice as well. And if you have any thoughts on this, send them my way.

Happy New Year!

Is your company ready to compete in 2009? We are well aware of the challenges our organizations face in today’s economic environment. And when the economy eventually turns around we will be facing an increasingly competitive global marketplace. This means employee knowledge and skills will become even more important to our business. Many companies have adopted various management styles and work practices to unleash employee talent. Consequently these companies are able to achieve higher levels of productivity improvements and innovations.

For example, implementing lean is as much about establishing an appropriate philosophy and culture that encourages employee involvement as it is about using the tools and methods of lean. Regardless of the work practices used, increased employee flexibility in the use of their talents and greater autonomy in their decision-making is essential. And training serves a critical supporting role for companies to successfully implement appropriate work practices.

Indeed, research shows that employee training increases when new work practices are used. It is pretty obvious to think about – if the use of work practices that engage employee knowledge increases, then training investments increase.

As you know, training can mean many things. It ranges from technical training that imparts specific job-related skills, to managerial and leadership training that imparts the ability to organize work and lead others, to awareness training that provide an awareness of important ideas. Regardless of the type and approach to training, the best way to unleash the knowledge and skills of employees is to support any effort with systematic training.

So, as you think about 2009 and how your company will compete, you will undoubtedly acknowledge the importance of your employees’ talent. Take that thought further and spend some time to systematically layout the organization’s needs and requirements to develop exceptional employee talent.

My best wishes for a successful 2009!!