Good or Great?

“We are so good at being good that we forget to be great!” This was the opening comment by a CFO to the company’s management team at a retreat I spoke at last week. As I thought about this it occurred to me that many companies fall prey to this focus. But, what is great?

Great is a focus on the customer. As I tell many of my clients, you need to deliver what the customer wants when they want it. Who defines quality? The customer! What is the most important metric? Shipped on time!

Great is constant innovation. Innovation can be related to new products which is what most companies think, but it can also be related to constantly pushing the limits of growth, service, quality and cost. Apple is innovative and is great, Microsoft is focused on good. Look what has happened to the relative stock prices over the past couple of years.

Great is continuous improvement. CI is a management approach of small constant process improvements that lead to competitive advantage in providing the customer with what they want, when they want it at the lowest possible cost.

Good is use of technology and cost reduction to gain temporary competitive advantage. Great is relentless process improvement with a focus on the customer which provides long term competitive advantage that is hard to copy.

Are you good or great? Good might mean survival, great means success!

© 2010 – Rick Pay – All Rights Reserved

Operations Discipline

I am developing a new area of thought I call Operations Discipline. This area of thought comprises those elements required to most efficiently and effectively execute the key aspects of manufacturing, distribution and service operations. Operations Discipline includes the elements of systems/processes, constructs/rules and behavior/accountability. These elements are all within a framework of continuous improvement.

A strong culture of Operations Discipline results in a highly profitable operation with strong customer service and effective use of assets such as inventory. Weak Operations Discipline results in not only the antithesis of the above, but also low morale.

There is another similarly named area of thought called Operational Discipline, but it tends to focus more on safety and environmental issues particularly in process industries. Operations Discipline deals at a much more strategic level, affecting the very culture of an organization and its ability to carry out its mission. I will be writing more on the elements of Operations Discipline in future postings.

Operations Discipline

© 2010 – Rick Pay – All Rights Reserved

Operations Discipline – Water Slowly Boiling!

There is an old story that if you drop a frog into boiling water he will jump out. But if you put the frog into cold water and turn up the heat, he will slowly cook to death. While somewhat gruesome, that is an apt description of what happens when organizations lack Operations Discipline. They slowly die due to increased costs, increased inventory, employee frustration and weak customer service.

So, what is operations discipline? It is the willingness to create and follow processes/rules and hold people accountable for performing them. In lean speak, it includes standard work. In standard work, each process is defined and performed the same way every time. This takes randomness out of the process which improves quality and provides a foundation for continuous improvement.

Recently I have seen a number of companies whose culture does not hold people accountable for following process. Things as simple as having standard part number structures are either non-existent or are not enforced. The result is excessive part numbers, increased inventory, increased costs, increased obsolescence and other things that look like the frog slowly cooking. Turn the heat off – implement operations discipline.

© 2010 – Rick Pay – All Rights Reserved

Dragon Boating and Business – Similar Results

Dragon Boating and Business provide similar lessons in leadership and team work. I am the steersman on a dragon boat team comprised of 20 paddlers, a caller and the steersman. Dragon boating is a competitive game and is the second fastest growing sport in the world. Saturday, August 28, my team raced in Tacoma, Washington, on a 250-meter course, which takes about 1 minute 10 seconds to run from a standing stop.

We sometimes don’t have the best start sequence and often find ourselves behind after that phase of the race. But with our mid-course power and end of race rate-up, we came from behind in three of our four heats to take 1st and placed second in the other heat. In the end, we won the gold medal in Recreation “A,” which is the competitive mixed championship.

My point is this: often in business as in racing, the start of a new project can be a bit rough while the team members get synchronized and into their race. But as the effort continues and the finish line comes into view, the better teams – and I emphasize “team” – trust the stroke, follow their lead strokers and pull away from the pack to win the race. I often tell my clients during new projects that things will get worse before they get better, but if the team is trained well, trusts their leaders and is technically competent, they will win the day.

© 2010 – Rick Pay – All Rights Reserved

Do You Need Kaizen Events to Make Improvements?

Many Lean practitioners seem to take the position that the way you do process improvement is through Kaizen Events. In a Kaizen Event (sometimes known as a Kaizen Blitz) a team of people focus on a given work area or problem, and they develop and implement improvements. While these events can take from a half day to a full week or more, the definition of the event put forth in “The Kaizen Blitz” (AME – 1999) suggests that three days is best. This is not incremental improvement; it suggests significant improvement over a short period of time.

But do you need to wait for a Kaizen Event to make improvements? NO! I was talking to a manufacturing executive the other day that has many small activities going on all at the same time (he won’t even refer to it as Lean) that resulted in about a 7% annual cost reduction/profit improvement on total sales! He believes that continuous improvement by itself empowers people in operations to make many improvements which over time, add up to big numbers. Some of the improvements might take only minutes to identify, plan, do, check and adjust. Others may take hours, days or even weeks depending on the scope. His thought is – don’t limit people to an event to make improvements. Empower them to make them continuously and it becomes part of the culture.

© 2010 – Rick Pay – All Rights Reserved

Is Lean Losing Its Fizz?

It is interesting how things come in threes.  Just this last week, I have spoken to three heads of Operations about their Lean journey, and all three noted that it seemed to be going flat.  In most cases, they had been on the road to Lean for over two years, but due to various circumstances, the improvement from Lean was declining and the enthusiasm on the part of the employees had almost disappeared.  In one case, he rejuvenated the process, but that is another story.

In January there was an article in the Wall Street Journal that suggested that 60% of companies that tried process-improvement initiatives failed to achieve desired results.  Another article about the same time suggested that after five years, 70% of companies polled were no better off than when they started.

A few questions to ask yourself:

  1. Has your organization achieved real gains beyond the initial low hanging fruit of process improvement?
  2. Have those improvements been sustained over the longer term?
  3. Is your organization still enthused about Lean or other process improvement initiatives?

If the answer to any of the above is no, you are probably headed to the same result as the 60% of companies cited above.  It’s time to take action to be sure your improvement initiatives yield the highest result and are sustainable.

To find out more, visit my website and look under the Industry Resources section.

© 2010 – Rick Pay – All Rights Reserved

The First Step in Change Management: Create a Crisis

One of the key weaknesses I see in management today is the ability to successfully manage and implement change.  Change initiatives often are less than successful, or if initially successful, lack sustainability.  One of the key reasons for this is the lack of a clear case for why the change is occurring.  People want to know “why are we doing this?”

To kick off change, it helps to have a rallying cry in order for people to see the need for change.  Such a rallying cry is a crisis.  The HP printer plant in Vancouver, Washington once made a major change on how they designed and shipped product because top management said that if the plant couldn’t become profitable, they would shut it down.  Now that’s a crisis!

If you don’t have a clear crisis, create one.  It could be a market issue, a survival issue, a profitability issue or anything that inspires people to do things differently in order to meet the challenge.  A clear crisis will help initiate and sustain change.

© 2010 – Rick Pay – All Rights Reserved

How Do You Start a Lean Journey? Paint the Lunchroom!

When many companies begin a Lean journey, they wrestle with where to start. Some will begin with training, trying to help employees understand the basics of Lean. Others start with 5S (work place organization) because it is fairly easy to do and demonstrates visible results. Still others will establish new policies such as no lay-offs (due to the Lean process).

I suggest you start by painting the lunchroom! What has this got to do with Lean? Actually, several things – first, it shows you are really serious about changing the environment of the company to one of quality. Second it shows you really care about the environment in which the employees work. How can you expect them to go the extra mile to produce Lean processes and then allow them to eat in a dump? Painting the lunchroom says 1) we want quality, 2) we support you and care about your work place, 3) we are serious about culture change. You could also get new microwave ovens and a refrigerator! If your lunchroom is already in good shape, find something else that will make a statement to the employees.

The first critical step for a Lean Journey is to convince yourself and the employees that things are going to be different; that the culture is going to change. A great way to demonstrate that is to paint the lunchroom!

Lean – Making It Happen

Many companies are getting on the Lean bandwagon in an effort to reduce waste and become more competitive. Yet, according to a recent article in The Wall Street Journal, 60% of companies that have been implementing Lean for several years find they have regressed to the point they were before they started.

How do you get results and make those results stick over the long term? There are several keys to success:

1. Top management must be engaged. More than just supporting the projects, top management must actually be a part of the process.
2. Lean is a culture change, not just implementation of some tools to reduce costs. Employee empowerment, teams, and a culture of problem solving are critical to success.
3. The right people must be in key positions. Managers must be willing to accept the change that Lean represents and “walk the talk” every day.
4. Key systems and processes must be in place to support Lean. For instance, cost accounting systems might need to change to re-enforce Lean.

Companies should conduct a Lean Assessment to be sure they are ready for Lean. Otherwise, they may find that long lasting results are illusive.

© 2010 – Rick Pay – All Rights Reserved