by Arun Shukla
ean manufacturing is an accepted vehicle for organizational transformation. It brings a bias for disciplined action, claries the intuitive knowledge gained from experience, and puts an organization on the path to accelerated business results. Yet industry reports and research indicate that while most organizations have a reasonable understanding of the technical pieces of the lean puzzle, they struggle to realize its promise.
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
In the quest to attain ow with zero waste, organizations are falling short on the people management aspect of lean implementation. As lean gurus swamp the shop-oors, the people who are actually responsible for sustaining lean programs are relegated to the background and are not well managed. Their importance in the lean journey to success is ignored and misunderstood. This often leads to variable and unpredictable process improvements and business results that cant be maintained. Getting FAT results from lean implementationit sounds Atkins-approved. The truth is, like any successful diet, results can be improved by focusing on the person involved in the program. At Kepner-Tregoe, we frequently help clients integrate the people side of the equation and improve results. In lean initiatives, focusing on the people pieces helps organizations solve the lean puzzle. The results can be FAT - Financially triangulated results that come at an Accelerated pace, and are Translatable consistently across other parts of the organization. To achieve FAT results, we must rst understand the lean landscape, lean management practices, and the performance system that drives project team behavior.
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
is a measure of process or business performance. The population curve of projects follows an S curve with cumulative stages of lean success. Operations improvement projects in a variety of industries in different geographies support this pattern.
At the bottom left of the spectrum is the negative zone, when + Lean teams witness a downturn (+ive) Reactive Management of in business performance as a Process Elements Base Line Performance result of a lean implementation Serious Program project. It sounds odd, but it is Review Required (-ive) often true; business performance takes a step backwards as the Time Line processes around the targeted area within the organization adapt to change. This negative trend is transient in nature. Within a short periodat maximum, within a quarterthe performance should take an upturn towards the desired goal. If not, the program needs serious review. The majority of projects are populated around the rst zone of performance improvement. These projects are in the low hanging fruit category. Processes in this zone tend to be managed in a reactive mode. However, as process execution matures to proactive management, process/business performance improves dramatically. The next quantum leap is made as organizations rise above process management and acknowledge the importance of people in the project.1 Ultimately, lean nirvana is found when the human performance system is proactively managed at an individual and an organizational level. The gains here are asymptotic. Assessing an organizations maturity on the lean curve and mapping operations improvement initiatives on this chart can provide valuable insights. Continuing progress along the lean maturity curve requires understanding of the dynamics of people vs. processes, reactive vs. proactive process management, and their interrelationships in lean projects.
Strategy
(Goals/Direction)
Identify
Conduct
Integrate
Assess
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
ing the performance of the processes that constitute an organizations activity. Since people work within an organizations processes, we need to improve the performance of both processes and people to gain any substantial and sustainable advantage. Lean management is an adaptive system of continuous improvement of multiple, interconnected processes. Each employee should understand the interrelationships between the key elements of lean management. The lean process begins with setting goals that are directed by the company strategy. Gap analysis identies the most critical business processes for meeting these goals. The organization then conducts business process improvement and integrates people and process performance. Finally, a post-project review is performed and the cycle is repeated. We believe that FAT results are generated in a lean program when the conducting business process improvement and integrating people and process performance elements of lean Expected Process Performance management cycle are administered in proacGoal tive mode.
Acceptable Range of Variance
Base Line
Unacceptable
Past Future
Consider this simple diagram of expected process performance. For any process there is an acceptable range of variance. Clearly the objective of implementing lean is that the lower end is not acceptable anymore and the future should evolve between the baseline and the goal line.
Base-line
-A
ctu
If the answers to all three questions are afrmative, the organization should conduct a root cause analysis. This analysis leads to identication of causes and development of multiple alternatives. Action is taken on the best-balanced choice with risks assessed. Why do we term this as reactive? It is reactive because the process improvement analysis is based on historical data. Some precipitating
Unacceptable
Past
4
4
ctu
al
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
changes in the past have led to a performance deviation, and attempts to remove it or replicate it are being made as a reaction to this altered state. This is the low-hanging fruit of performance improvement. An organization following this route can quickly ramp up its performance by making the should or upper level the best demonstrated practice. The critical success factors for reactive process management include: Understanding process performance goals Monitoring the baseline Being specic! Managing from overly broad or inaccurate data will create costly cost/time overruns
Typical gains of 15-20% productivity, reductions in work-in-process inventories, and reduction in oor space and travel times are examples of the low-hanging fruit that wellexecuted lean events can reach in the early phases of an organizations lean journey.
ct
al
Future
Potential Opportunity Analysis helps teams explore the future for better-than-planned process performance. In such cases, the teams need to decide about promoting the likely causethey want more of it so process performance exceeds expectations. They take actions and set triggers to capitalize on the potential effect. When things do go better, they are prepared to take full advantage of the opportunity. Unfortunately very few teams are proactive enough to exploit things that go better than planned. A lack of data and precedence can be a barrier to proactive management. But data and precedence exist if you seek information on the cause or effects of the same or similar processes. The chart of managing ow time opportunity provides an example of the proactive management of a process. A lean team charged with improving ow time may focus on
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
multiple likely approaches that reduce the work content on the critical path or remove elements from it. Each approach can be analyzed for potential opportunity by identifying likely causes, taking promoting actions, and planning actions that will capitalize on process ow time improvements.
4
Segment II
Segment I: 1-4-8-9; Segment II: 1-2-5-7-9; Segment III: 1-3-6-9 Theoretical Maximum Time
9
2
Segment III
Segment III Critical Path Actual Process Time Segment III IS Potential Opportunity (IS Should); $ Value; Impact Points
LIKELY APPROACHES
Reduce work content on activities on Segment III (either all or some of 1,3,6,9) Eliminate non-value add activities Speed-up activities (faster equipment, labor incentives) Reduce waste/repetition of work An optimal product-mix which leads to above actions Move Segment III activities to Segments I or II Measure float and move 3/6 or part of to segment I or/and segment II without making them critical Outsource 3 and/or 6
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
commonly understood, or not communicated. At KepnerTregoe we recommend using a rational approach to increase the likelihood of getting the should behavioralso known as performancein lean projects. We call this approach the Performance System.
Performer: the individual or group expected to behave/perform Situation: the immediate setting or environment in which a Performer works, such as the project environment Response: the behavior (also known as performance) of the Performer Consequences: events that follow the response and increase or decrease the probability the Response (behavior/performance) will occur again, given the same Situation Feedback: the information that Performers receive about progress toward their goals; it helps guide their Response (behavior/performance)
The ve elements of the performance system are interlinked and should not be considered or administered on a stand-alone basis. Lean projects that impact an entire organization require a performance system hierarchy that is mapped to the organizational hierarchy. This claries the organizational dynamics and integrates both people goals and organization goals. The Performer is usually an individual but can have a broader denition as a team or larger organizational unit. This broader denition is most useful in lean implementation.
Feedback
How appropriate is the Feedback and how well is it used to influence performance?
Situation
How clear are the performance expectations and how well are they understood? How clear is the signal to perform? How well does the work environment support expected performance?
Fb
Consequences
How well do the Consequences encourage
expected performance? The Situation refers to the immediate environment or setting in which + the Performer worksthe lean project team, the department, or business unit Response Performer What is the observed How capable is the of which the Performer performance? Performer to meet the performance How does it compare is a member. Three key expectations? with expectations? elements describe the Situationperformance expectations, signals to perform, and the work environment. Each element of the Situation impacts an individuals or lean project teams behavior.
Consequences are events or conditions that follow a Performers Response and increase or decrease the probability that the Response will occur again, given the same Situation.
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
Plant Manager
R
Fb
C+
Director Finance
Director Operations
R
Fb
C+
Director Personnel
Fb
Manufacturing Manager
R
C+
Question:
What is the primary RESPONSE being observed?
Fb
Testing Supervisor
Technical Supervisor
Production Supervisor
R
Production Supervisor
C+
Fb
Testing Technician
Maintenance Technician
Production Operator
R
C+
In many lean projects, the lean guru assumes that the people can be provided with the necessary technical skills through training workshops. This not only goes against the lean philosophy of lean as a way of life and learning as part of the journey, it compounds the damage because Performers fail to understand why their desired performance is important and how their Response can have an impact across the value stream. Managing the Situation element begins by establishing if the Performer had the appropriate operating environment. This is accomplished by asking: Did the Performer know the desired output? Did process performance standards exist? Did Performer consider the standards attainable?
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
Lean projects that fail to move beyond phase I have their roots in Performers, both individuals and project teams, not understanding their unique Situation, that is, the combination of products, customers, supply chain partners, and processes that support those transactions. The Response from the Performer is validated by asking: Which process performance was observed? Did the performance met expectations? What were the desired, the undesired, and the alternative Responses?
In our observations many lean projects demonstrate a high degree of ambiguity around performance measures and lack of common understanding on desired, undesired and alternative responses. The Consequences for the both the Performer and the organization can be conrmed by considering: How well do the Consequences support the desired performance? Were the Consequences meaningful to the Performer? To the organization? Were the Consequences immediate enough to encourage the desired performance? Developing effective Feedback mechanisms should be one of the rst steps in inuencing performance, since improvement will only be sustained if the Performer is able to detect progress. Feedback mechanisms are established in the ground-rules activity of project management and are a reection of how the project manager goes about communicating progress to project contributors and sponsors. Managing the Feedback loop completes the full circle of people performance management. The questions asked about Feedback must include: Did Performers receive information about their performance? Was it relevant and accurate? Was it timely and specic? Was it easy to understand? It is expected that not all questions will have afrmative answers, but ensuring that concerns are discussed with the Performers and corrective measures designed in place gives lean projects a much higher probability of improving future results and sustaining the gains.
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
Identifying Performers whose Responses must be changed or improved Modifying the performance system variables (Situation, Consequences, and Feedback) Communicating and implementing changes
The questions in proactive management of people performance are forethoughts, not afterthoughts. To empower the Performer to deliver the desired Response, the following questions help design the performance system: What necessary skills and knowledge will be required by the Performer to deliver the desired Response? How would the importance of desired performance be made visible to the Performer? What physical and mental attitude is needed by the Performer? Proactively managing the Situation element requires asking: What is the desired output? What performance standards need to be designed? How can the standards be made attainable to the Performer?
To ensure that the Response can be measured correctly, the following questions need to be answered in the design phase: Which process performance will be observed? What are the desired performance levels? How will the desired, undesired and alternative Responses be made visible?
The Consequences for the both the Performer and the organization are designed by considering: How will the Consequences support the desired performance? Will the Consequences be meaningful to the Performer? To the organization? Will the Consequences be immediate enough to encourage the desired performance?
Designing the Feedback loop completes the proactive performance system design. This requires considering: How will the system ensure that Performers receive information about their performance? What will make the Feedback relevant and accurate? How can Feedback become an element of the project work breakdown structure to ensure its timeliness and specicity? What will conrm that the Performer understood the intended Feedback?
Designing a performance system is not akin to cultural change, but it is a practical approach to inuencing performance in a focused way to get desirable results for projects. Cumulative successes help build a lean culture without directly confronting the existing one.
10
FAT Results from Lean Implementation: A Rational Process Approach to Lean Success
Conclusion
Most lean programs dont capitalize on the benets of managing processes proactively and forego the steep gains that can be achieved by managing human performance. Like all journeys, the lean journey requires a roadmap. A good lean roadmap must integrate the human performance system and management of business processes for sustainable business performance. Both people and processes should be managed with a structured, rational approach that includes both reactive and proactive management. Engaging people in a way that builds positive reaction to lean implementation within an organization is critical. By creating a performance system that encourages people to succeed, the lean journey moves into a new territory of signicant, sustainable results.
Endnotes
1 2
Keith Pelkey, Business Process Improvement and People Performance, (2002) Charles H. Kepner and Benjamin B. Tregoe, The New Rational Manager, (Princeton, Princeton Research Press, 1997).
11
Afliates Brazil Chile Finland Italy Korea Mexico (serving Costa Rica,
El Salvador, Guatemala, Honduras, Nicaragua, and Panama)
Venezuela Serving additional locations in: Africa and Europe (UK) The Americas (USA) Asia (Singapore)
Kepner-Tregoe, Inc. P.O. Box 704 Princeton, NJ 08542 609-921-2806 Fax 609-497-0130 www.kepner-tregoe.com e-mail: info@kepner-tregoe.com
2/05
700-47-P071004
KL580.a