Lean, Competition, and the Bear Story

In lean and in business much is often said about growing and improving our organizations so that our competitors will not steal our jobs. This is especially true during these times of global recession. With our recent economic downturn there are more supply lines then there are. All organizations, markets, and industries are and will be affected by this.

Of course, I think those companies practicing lean and innovating new products have a better chance to minimize their exposure during this downturn period and be positioned to capitalize on growth on the upside.

Companies need to remind themselves of The Bear Story:

Two friends went camping in the north woods. In the middle of the night they were awakened by the sound of a bear outside their tent. One friend was busy panicking when he looked over to see his buddy calmly lacing up his running shoes.

“Why are you doing that, you fool? Everyone knows you can’t outrun a bear!”

His friend looked at him and said, “I don’t need to outrun the bear. I only have to outrun you.”

This simple story illustrates a strategy many organization practice especially important during times of recession. We need to execute better than our competitors or our customers will go somewhere else. The company that handles the recession better, responds better, treats its customers better, and executes better is the company that will lead the way out of the recession by taking market share from its peers.

As you work on new product development and operational excellence through Lean share the Bear Story so others truly understand why this is so important.

Crisis-driven versus Kaizen-driven Thinking

The global marketplace has created a new game whereby forcing companies and their leaders to change the way they think and operate. The object of this game is to consistently provide even-higher quality products and services at lower costs relative to the quality produced. This is contrary to our societal belief that higher quality must cost more.

Three fundamental shifts in an organization’s mindset make it possible to understand how to achieve high quality and low cost in every action taken. First, there is a shift from a purely externalized view of the world to one that combines the internal with external. Organizations not only focus on strategic external activities but understand the importance of internal capability. Second, there is a change in focus from content, or results - a focus that only sees outcomes - to one that appreciates the process leading to them, as well as the results. Finally, a shift from acting in response to external crises or stimuli, to being internally driven by the freely chosen will to improve and create something better. I am going to focus on the later for the remainder of this discussion.

Tom Lane and Alan Green wrote about this change in thinking in their book “The Way of Quality, Dialogues on Kaizen Thinking” in1994. They talk in detail about the shift from what they call “crisis-driven” thinking in which people react and respond to problems once they occur to what they call “kaizen thinking” where people prevent problems before they occur. The table below contrasts the way of thinking of these two approaches.

MENTAL FRAME	CRISIS-DRIVEN	KAIZEN-DRIVEN
Psychological Need	To be right and best.	To be improving continually.
Method of Perceiving	Looking at results with desire to control outcomes.	Looking at process to increase comprehension and performance.
Object of Measures	Fix blame, determine what / who is wrong.	Get data on current performance to help improve and adjust.
Source of Mental Energy	Threats / fear, fire-fighting excitement.	Problem elimination, challenge to improve.
Psychological Reward	Short-term fixes, immediate feedback	Long-term system upgrade, indirect feedback.
Attitude toward Change	Avoid major system change because it implies wrongness.	Expectation of constant small and large changes.
Guiding Principle re: Change	If it ain’t broke, don’t fix it.	It can always be done better.
Learning Approach	Quick analytical skill and remedial action.	Curious about large system: act to create quality, prevent recurrence.

While there may be a strong desire to shift from crisis-driven to kaizen-driven thinking, the transition must be made carefully. The crisis-driven system requires ongoing attention, even while it is being phased out, because it lies at the heart of all our current systemic structures and till maintains order.

Moving to kaizen thinking may be difficult but not impossible. It requires us to change our action behind thinking. Below is a table of key drivers of action behind crisis and kaizen thinking.

Crisis Thinking	Kaizen Thinking
After the fact	Before the fact
Event-focused	Process-focused
Judgmental/critical	Curious/investigative
Right/wrong-based	Data-based
Non-systemic/narrow	Systemic/broad
Short-term fix	Long-term change
Expedite out-of-control operation	Upgrade in-control operation
Immediate/direct reward	Long term/indirect reward
Immediate problem fix	System/operation improvement
Minimum diagnosis	Continuous thorough diagnosis
Work/problems come to you	You go to the system
Internal –hero oriented	Customer oriented
Narrowing of thinking scope	Raising/widening of scope
Time to redo	Time to do it correctly
Progress is tangible only	Progress often intangible
Working harder gets it done	Working smarter gets it done
Variance to fixed standard	Standard continually upgraded
Fragmented jobs	Work as unified flow
Disconnected individual effort	Connected joint effort
Things always break	Things are prevented from breaking down
Don’t fix it if it isn’t broken	It can always be improved
Give me simple answers now	Let’s see how this works
Don’t ask questions –do it	Questions help us understand
Don’t confuse me with data	What are the data?
Job security comes from their depending on my ability to fix	Job security comes from increasing our capability
Learning takes too long	Learning is continuous
Learning means you are inadequate	Learning is necessary to deal with change
Getting by is good enough	Fixing it permanently is the only solution
Quality is passing inspection	Quality is no variances
Quality is not as important as quantity/low cost	Quality is everything we do and think
Don’t challenge the system	Everything can be improved
Success is individual	Success is of the whole
Work manages me	I manage my work
Customer reactions drive improvement	Customer input blends with technology and capability input to create improvement
I get paid to react quickly	I get paid to think, then do
Who is to blame is important	What went wrong is important
Targets are to be hit	Trends of improvement are tracked
Don’t worry about the big issues	Work on seeing how large issues affect the small ones and vice-versa
Mistakes mean failure	Mistakes show where we need to improve
External simulation from crises (especially bosses)	Internal simulation from exploring, discovering, improving, understanding
Physical energy dominates	Mental energy dominates
Bored with discipline, routine, energy goes into complaining	Dislike disorder, maintain orderliness; cleanliness, standards, safety; self-managing

Thinking is what shapes our actions. Not only what we think but how we think. World-class products and services result from breakthrough thinking. If companies are going to deliver higher quality and lower cost in the increasingly competitive global economy, they must change the way they think about work, organization, and themselves.

Standard Work for Flu Season

With the start of flu season in the northern hemisphere and the growing concerns about H1N1 Flu companies and individuals are looking at ways to prevent the spread of infection. Proper education, simple prevention techniques, and limited exposure around sick people have been recommended.

I recently observed a form of standard work displayed at the point of use in regards to preventing the spread of illnesses by hand washing. Frequent hand washing is one of the best ways to avoid getting sick and spreading illness. Hand washing requires only soap and water or an alcohol-based hand sanitizer.

Mounted in a restroom area at the sinks was a simple posting reminding individuals to wash their hands.

The posting described a 6 step process detailing the proper technique to effective hand washing. The process followed a simple clockwise flow with pictures and text describing the actions needed.

In this case a standard was created for hand washing that is easily visible at the point of use. Are you using Lean Thinking to tackle all your opportunities for improvement or just the manufacturing or service related ones?

Simple Visual in Hockey to Curb Violence

My oldest son has been skating for a few years and started playing competitive ice hockey on a team this year. On the back of the opposing team’s jerseys was a simple visual we all recognize, a stop sign.

This simple visual on the back of the jersey is a great way to make players STOP and think before they act. As it turns out this patch on the back of the jersey is part of a program called Safety Towards Other Players developed by Kevin Stubbington in 1996.

The STOP Program teaches participants about the dangers of checking from behind and other safety tips as well as values such as sportsmanship. “Checking from behind” is viewed as one of the most potentially dangerous actions in the game of hockey.

The STOP Patch is the focal point of the program. It is a three inch wide patch that is applied on the back of the jersey, centered just above the numbers and below the name patch. It is a reminder for players to “STOP” immediately and not make body contact when they see the patch because you are in a potentially dangerous position.

In operations we use this simple visual in much the same. Whenever we get an outcome that is different than expected we must STOP and think. Lean is about uncovering issues and solving these opportunities for improvement. We have used this visual to support changing our mindset toward Lean Thinking in our factories.

Simple recognizable visuals can be effective in changing behaviors just as this STOP sign on the back of a hockey jersey or in a manufacturing plant.

The Changing State of U.S. Manufacturing

Everyone has likely heard about the shrinking manufacturing base in the United States especially as we go through the current economic downturn. We all know people affected by organizations downsizing and off shoring jobs. It has been said that we have become a service based economy.

In a recent Industry Week article by Ralph Keller, the president of the Association for Manufacturing Excellence, he found that the data tells a different story. While the manufacturing sector has shrunk over the last several decades there is an upside. As a results of continuous improvement efforts manufacturing value-add has grown.

The number of people employed in manufacturing companies in 1977 was over 18.5 million but employment declined almost 29% by 2005 to just over 13 million. The number of hours worked by production operators also declined by the same amount to just over 18 billion.

Over the same period, the value added by manufacturing operations in the United States increased 377% from $585 billion to over $2.2 trillion, and manufacturers' sales increased 349%. The combination of increased value-add and reduced production hours results in the manufacturing value-add per production worker hour increasing by 530%.

This is really a case of increased productivity, not a shrinking manufacturing base as a result of continuous improvement and technological innovation. None of this would be possible without two key elements in businesses today. The first is the availability and use of capital to drive innovation in technology.

During the 29-year period of the Census data, capital investment in manufacturing companies increased from $51.9 billion to more than $128.3 billion, almost 2.5 times the investment in 1977.

The second element is the widespread adoption of Lean Thinking to improve our capability and efficiency in terms of value to the end customer.

Increased capital investment and increased productivity has resulted in less manufacturing jobs. But for those employed there is an upside in terms of higher wages.

The wages paid to production workers rose from just over $157 billion in 1977 to almost $337.5 billion in 2005. The average hourly wage (not including benefits) rose from $5.89 per hour to $17.70 an hour over this period.

The advantage the United States has over other low-cost countries is the access to higher-skilled workers with knowledge of continuous improvement methodologies using more capable equipment. This means the future of manufacturing here is value added products with higher profitability for US companies and higher standards of living for those US workers.

DOWNTIME and the Eight Wastes

Acronyms can be a very effective tool for remembering new concepts, objectives, and processes. We use acronyms in virtually all aspects of our lives to aid our memories. In learning the Eight Wastes (of which I prefer over the 7 wastes for highlighting the human element of waste) the acronym DOWNTIME is a useful memory aid.

Defects

Over-production

Waiting

Non-utilized Resources/Talent

Transportation

Inventory

Motion

Excess Processing

This is especially effective in relating to value added work and non-value added work.

In manufacturing or service orientated processes there are a series of steps that make up the total lead time to provide the customer with a product or service. This lead time is characterized by value added activity and non-value added activity as shown below.

Now of course we know that our goal is to reduce the waste or non-values added activity so as to maximize the value to our customer. This value creating activity is the only activity the customer is willing to pay for resulting in the company paying for the non value added activity. Non value added activity essentially delays the time to complete the product or service which in essence can be characterized as DOWNTIME.

By focusing on reducing or eliminating the Eight Wastes associated with DOWNTIME we can shorten the lead time to the customer as shown above. This will result in lower costs, higher capacity for more demand, and increased customer satisfaction which are all desirable to grow your business profitably.

Using the acronym DOWNTIME to remember the Eight Wastes is an effective tie in to the concept of value added activity and how it relates to the cycle time of satisfying your customers.

One Stop Resource at The Lean Library

Do you like one stop shopping? It would certainly be Lean to be able to get everything you need in one place. Well, you can find everything Lean at The Lean Library. The Lean Library offers insightful book reviews, guides to help you find the right book and quick links to help you purchase them. There are sections for useful links, research articles, current lean news, and updates from the Lean Blog Community.

The Lean Library is comprised of the following sections:

Card Catalog consists of books on virtually every Lean subject with links where you can find them.
Reviews are a compilation of book reviews by experts on the Lean body of knowledge.
Periodicals are a collection of lean articles with an emphasis on new research.
Links are a collection of online resources and information on Lean.
Latest Lean News provides news update on Lean Manufacturing.
Lean Blog Aggregator allows you to check out what other blogs are saying about Lean including this blog.

And probably the best section for those just starting out or trying to learn a new concept is the Ask the Librarian section. This allows you to find books for the topic you are interested in most.

The Lean Library is the concept of Jamie Flinchbaugh, co-founder of Lean Learning Center. I wrote about the Lean Learning Center before and if you have not checked it out you should. All the proceeds at the Lean Library go to charitable organizations focused on educational programs, mostly at universities, that promote lean concepts or other cross-discipline collaboration efforts.