Changing Mindset with 3 Metrics and 2 Colors
Steve Jobs’ admiration for Zen Buddhism inspired him to change the world by simplifying and reinventing the cell phone. There are two lessons we can learn from Jobs: 1) simplification is powerful and 2) it isdifficult to achieve. If you are fortunate enough to recognize the need for simplification (because most people are not), you are now faced with the challenge of actually achieving it. One reason simplification is so powerful is because it removes all the noise and leaves only that which is essential. That noise is the culprit behind the failure of most Lean journeys. The complexity of the design behind most Lean transformations leaves people buried and overwhelmed. Here are two ways to simplify your Lean journey (a 5S guide on what to eliminate in your Sort if you will) in order to get to that which is essential: mindset.
One reason simplification is so powerful is because it removes all the noise and leaves only that which is essential.
Lean Metrics
“You can’t improve what you don’t measure.” If we apply this old adage to most companies, then they are trying to improve a bunch of stuffthat doesn’t matter. Most metrics are centered around financial performance and don’t have personal meaning to employees. The shift to Lean metrics seeks to simplify with a focus on three core Shingo principles: 1) create value for the customer, 2) create constancy of purpose, and 3) think systemically.
From the customer’s perspective, they want what they want (quality) when they want it (delivery) at the lowest price (cost). Thus, our metrics should be focused on quality, delivery, and cost. Although it’s important to have strategic measures of success in order to define the financial direction of the company, e.g. EBIDTA, it is important to translate that direction into an operational one. And since value is delivered to the customer horizontally (via a value stream perspective), it is critical we start this translation at the value stream level, cascading down to the process and individual level. In doing so, we create constancy of purpose from the CEO down to the front-line performer.
For example, if you are a financial services company that wants to increase the number of lives under coverage for an insurance product, you would have to translate this into the anticipated number of claims to ensure you can service your growth. Thus, at the value stream level you should have a lead time target (delivery), a first pass yield target (quality), and a productivity target (cost), all based on the customer’s expectations. At the process level, you should translate the same few metrics to have meaning, i.e. lead time for the value stream becomeslead time for the process, first pass yield becomes percent complete and accurate for the process, and productivity for the value stream becomes productivity for the process. The translation doesn’t stop there. It is also important to have standardized work at the process level as a foundation of continuous improvement. Standardized work should include standard work in progress (ties to lead time), steps and sequence of how to do the work (ties to quality), and cycle time (ties to productivity) relative to the required takt time (ideally less than). Thus, when targets are not met at the value stream and process level, a go and see can be performed to see how the front-line is performing to standardized work. But before that can be done, it is important we can see. This brings us to our second area of focus for simplification.
The shift to Lean metrics seeks to simplify with a focus on three core Shingo principles: 1) create value for the customer, 2) create constancy of purpose, and 3) think systemically.
Visual Management
Now that you have connected a few, simple metrics and targets from the c-suite to the front-lines, it is time to see performance to those. It should be easy to see if you are winning or losing quickly through the use of visual management. However, one of the main obstacles that gets in the way to this is something nuanced and probably overlooked: the amount of colors found on the visual board. In a recent go and see, I observed five different colors, including orange for being at risk of missing target, green for meeting target, and purple for exceeding target. This made it difficult to quickly identify where problems, the red, were occurring. I asked the manager of the team why any colors other than black and red were needed and he paused for a good minute. Finally he replied the various other colors made his front-line “feel better” about the red. At that point in time I asked him why not deal with the real root-cause: the mindset his team had regarding the red. He saw the point and decided to simplify to black and red only. This would allow us to see problems quicker and, as a result, have a more focused conversation, which is where the real work begins.
...deal with the real root-cause: the mindset his team had regarding the red.
Mindset
With visual management focused on 3 core metrics displayed in only two colors, all distractions are removed. This quickly reveals the need to work on behaviors grounded in the old culture mindset that work against the Shingo principles of focus on the process, quality at the source, respect for the individual, and lead with humility. Some of these behaviors that need to be worked on include:
Blaming of others for problems
Acceptance of poor quality as something that cannot be remedied (especially in financial services where it is believed brokers can not change their behavior)
Seeking quick “solutions” without understanding the root-cause of the problem
Looking to leadership to solve problems and provide all the answers
Once you begin to see these, don’t panic. Celebrate. You are ready to roll-up your sleeves and begin the real work of becoming a Lean company.