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The Lean Blog by Velaction

This Lean blog is dedicated to providing useful Lean information that both changes the way you think about continuous improvement, and gives you tools to act on those changes. It is the only blog backed by The Continuous Improvement Companion, our extensive Lean reference guide.

One of the mistakes companies make when they try to create a business system or develop a continuous improvement culture is that they focus on the wrong things. They scrutinize behaviors. They spend their energy reacting to unexpected results. They bounce from tool to tool trying to find a fix for their problems.

What they often overlook, though, is that fact that their employees are often not guided by unifying principles. There is no clear corporate identity. Guiding principles are like beacons for the team, and create continuity as people come and go.

The following list of principles comes from our continuous improvement transformation model. It breaks the progress from an ordinary company to a world-class one into six phases. Each of these phases requires the adoption of certain principles to successfully navigate through it. While this is a fairly long list of principles, they are rolled out over an extended period. By the time you move to the next phase, living by the previous principles should have become a habit.

PHASE 2: COMMITTING

In the committing phase, the key leaders of an organization turn the corner from accepting business as usual to choosing a new path. It is one of the most difficult of the phases because it entails accepting that there is a flaw in the way the business is currently being run, or at least that there is a better way to do things.

  • Build RelationshipsIn the later phases, it is imperative that team members and the leaders in the organization work together. It takes a long time to cultivate a strong relationship, so the groundwork has to be laid early in the process of change.
  • Develop Trust: An integral part of relationships is trust. It is important enough to warrant a separate principle. Team members have to feel safe and confident in their bosses. Leaders have to believe that team members will act in the best interest of the organization.
  • Develop Leaders InternallyGreat organizations push themselves. Weak leadership results in a lack of stretch goals, and an inability to successfully reach them, regardless of how demanding they are. Strong leadership gives an organization purpose and direction.
  • Show Respect for PeopleFirst of all, treating employees respectfully is the right moral thing to do. After all, employees are people. They are not bodies, heads, etc. But beyond that it is good for business. Respect breeds satisfaction, and satisfaction breeds success.
  • Think Long TermFar too often, people think in a short timeline and don’t invest in the future. Creating a strong business system takes time and requires patience.
  • Embrace Facts and Data: You can’t effectively improve without a deep understanding of things. Far too often, decisions are based on opinion and create conflict. Facts and data create clarity and alignment.

PHASE 3: STARTING THE JOURNEY

There is an old expression that says even the longest journeys begin with a single step. The same is true when developing a continuous improvement culture. You won’t immediately reach your destination. This phase transitions the leadership team from deciding to acting and sets the tone for your Lean journey.

  • Look WithinThere is a tendency to focus on external factors and other people when facing barriers and obstacles. It is important to look at yourself first. This remains important throughout the development of a business system. The performance bar is continually raised. If you continue to operate at a static level, you will eventually become a barrier to progress.
  • Align the TeamIt should come as no surprise that great organizations have a unity of effort. Leadership tools like policy deployment and operations reviews are the tools for getting the team working together. The guiding principles on this list, though, are the bedrock of that alignment.
  • Avoid BureaucracyOrganizations without strong principles need lots of rules and policies to get things done. When you have a strong belief system, you need less bureaucracy to be effective.
  • Invest WiselyContinuous improvement is not free. It is an investment in the same way that buying a rental property has an upfront cost. Eventually, if you do the right things, you’ll get a payoff. But it is important to make sure that everything you spend has a purpose and will contribute to your overall goals. One of the best investments you will make when developing your business system is in people.
  • Know Your Customers and What They ValueIt is impossible to be successful in the modern, competitive world without understanding what your customers want and are willing to pay for. Pay close attention to the Voice of the Customer (VOC).

PHASE 4: BUILDING THE FOUNDATION

There are some key skills that your team will require as you develop your business system. You’ll also need some basic structure and systems. The focus of this phase is developing the required talent and building a Lean infrastructure.

  • Focus on Processes: Processes are the lifeblood of any business system. If people do things in a haphazard manner, you can’t expect consistent results. And without consistent results you cannot rely upon each other.
  • Learn to LearnPeople have three basic problems when it comes to learning. The first is that they don’t know what they don’t know. The second is that when they do see a knowledge gap, they tolerate it. The final problem is that they don’t know how to close the gap when they do identify it as a shortcoming.
  • Build and Empower TeamsIf you can replace your team with a robot, you’re not using people properly. Strong teams have the proper training to make decisions in the absence of leaders.
  • Create StructureCreating a business system based on a continuous improvement culture needs the right framework within which it can operate effectively. This structure doesn’t happen by accident. It needs to be planned and maintained for the business system to flourish.
  • Embrace SimplicityWe often confuse technology with effectiveness. Now, technology is fine when it makes things better, but technology for its own sake is not. Look for the simplest solution first, even if it is not as exciting as other options.

PHASE 5: RAMPING UP

Once the foundation is built, it is time to start building upon it. In the early part of the ramp up, you’ll probably focus on cultivating talent (though you will still need to deliver results). While that sort of focus on skills growth never goes away, by the end of the ramp up phase, most people on your team should have at least some continuous improvement experience. At that point, there will be a subtle shift from learning and teaching as the priority to a greater focus on results. Learning should not go away, but there will be a change in the ratio of how time is spent.  Note that this phase can take a number of years. It is important to be patient.

  • Structure Your ThinkingPeople need to think scientifically. That means that they gather and interpret facts about a problem before acting. This way of thinking is unnatural for many people. In the early days of humanity, fight or flight were the two basic responses when cavemen were presented with a problem. The decision had to be made quickly and was based upon what one had seen before. Modern problem-solving, though, tends to be ineffective when done with snap decisions.
  • Focus on FlowEvery time works sits it creates a problem. It takes more energy and effort to manage it, and customers wait longer to get what they want.
  • Create StandardsContinuous improvement requires a baseline the start and the ability to recognize abnormal conditions. This means that you have to have standards in place. Without them, there is no foundation upon which to improve.
  • Manage Your Value StreamCompanies often erect artificial barriers within the organization. They arrange their functions as silos. That makes it hard to create value for customers. Instead, the company should be arranged by value stream.
  • Improving Your Job is Part of Your JobCompanies turn the corner on their CI journey when employees start taking responsibility to make their own job better. In typical organizations, changes in work are driven by managers. When continuous improvement is part of the company’s DNA, people become dissatisfied with waste in their work and take action to do something about it.

Phase 6: Keeping Momentum

The risk during Phase 6 is complacency. Once the company gathers steam, it has to keep it. Don’t confuse this phase for steady state, though. The improvement trajectory should still be steep. It is just that it is using well-established systems with highly trained people. The stability of this phase also allows for greater experimentation with more sophisticated tools.

  • Build in QualityEvery company understands the quality is important to their customers. Most, though, inspect it into their products. Great Lean companies build quality into them.
  • Adopt a Zero Defects MentalityThis is a tricky principle. No company has ever achieved perfect quality. But that does not mean you shouldn’t strive for zero defects. It is a mentality more than a goal, and it results in localized pockets of excellence. Get enough of those pockets, though, and quality ends up being pretty great.
  • Strengthen Your SystemsSystems put tools into context. They also make sure that you understand how a change in one place will impact operations in another. Good systems also reduce the day-to-day effort required to run an operation.
  • Build Full EngagementEmployee engagement is actually the result of many other factors. Engaged employees, make customers happier, take the initiative more, contribute to higher morale, and make systems work better. The bottom line is that employee engagement helps the bottom line.
  • Monitor ProcessesIt is important to manage operations and solve problems with actual facts and data. You don’t get that information unless you monitor processes. Pay attention to that word choice. Make the distinction between scrutinizing people and tracking processes.

Phase 7: World-Class Performance

Few companies will make the leap from Phase 6 to Phase 7. First of all, it is hard to uncover the subtle distinctions between a very good company and a great one. Secondly, even if you know what to do, it can be extremely difficult to actually accomplish it. Winning isn’t easy.

  • Expect to WinThere is a fine line between confidence and overconfidence. Top-performing companies know that they have the right team and systems to take on the competition and beat them.
  • Think BigThe companies that have changed the world, or at least their industry, have always done it with great leaps forward. With a strong business system in place, an organization opens up more possibilities.

About this article: This article is part of “The Nuts and Bolts Guide to Continuous Improvement.” This practical guide to Lean takes a phased approach to creating strong business systems to create a culture of continuous improvement in your organization.

In each phase of your development, we introduce a handful of new principles to integrate into your corporate DNA. These principles are presented here in a rule format, but they are actually derived from ‘natural laws’ of business. For example, ‘Structure Your Thinking’ comes from the natural law that organized problem solving efforts tend to generate less waste and produce better results than snap judgements. Unlike values that are company dependent, these principles hold true across companies and industries.

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World-class companies take on projects that change the world. That’s not to say they engage in fantasy projects. But their confidence lets them take on game-changing projects that others would not even attempt.

Progress in the world is a mixture of evolutionary change and revolutionary leaps forward. World-class companies are well positioned to exhibit the grand thinking that changes the world.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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Confidence is a key principle for world-class companies. They don’t concede victory to other dominant players in the market. Granted, there is a fine line between confidence and overconfidence, but in world-class companies, the line between the two is often much further off in the distance than it would be for a company that doesn’t have the same history of sustained high performance. World-class companies take on challenges knowing that their systems will get them there, even if they don’t know the path yet.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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If you don’t track how things are going, getting better is harder than it should be. Can you improve if you don’t track things? Sometimes. The problem, though, is that problems are often subtle and sap resources without you even knowing it. Others are noticeable, but are hard to compare with each other for prioritization purposes. And still others are obviously problems, but are hard to pinpoint the exact nature and magnitude of the problem. There’s an old adage, “What gets measured, gets done.” A strong business system relies heavily on measurement to drive the improvement process.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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You may have gotten to Phase 6 on the backs of strong leaders and a handful of motivated individuals. But your company will not thrive once you arrive here unless you get everyone bought in. The ‘full’ in this principle actually has two meanings.

The first is that you need everyone to be engaged. Every person who is resistant is like an obstacle that disrupts your culture. The ‘full’ also means the level of engagement of each of those individuals. Being OK with the change is not enough. They need to embrace the culture and be able to act in the absence of specific guidance.

This is a unique principle in that it is both the cause and the result of success. The more engaged a team is, the more likely the team is to be successful. The more successful a team is, the more likely they are to be engaged. Note that this reinforcement cycle also works in reverse.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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The more you think in terms of systems, the more effective your company will be. Don’t just focus on drawing up Standard Work. Look at the entire work management system. Knowing how you will train people, and even hire people, can drive the way you document and structure your work.

Thinking in small chunks can make processes extremely efficient…locally. But sometimes local efficiencies hurt the big picture. And even once you start thinking in terms of systems, your work is not done. You have to continually improve those systems.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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There is an old story about a company that sourced a component from a Lean oriented supplier in Japan, and insisted that the vendor met a 2% failure rate target. The Japanese company balked and resisted that rate, but the purchaser insisted. Finally the Lean company relented and agreed to the 2% target. When the first order of 100 components arrived, there were 98 in the box, and 2 separated with a note saying, “Here are the two bad components you wanted. We still don’t understand why you need them.”

The point of the story is that one company lived by a zero defects mentality and the other followed the traditional path of assuming that there would always be some failure rate. Now, in truth, no process is perfect. But the pursuit of perfection gets you a lot closer to zero defects than accepting that a portion of your work will always be shoddy.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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There is a common misconception that inspections are an indicator of a good quality program. The truth is that inspections mean complacency. They require that you understand the failure modes and know what to look for.

That means you have known problems that you are accepting. A better way is to go after each item you inspect for and find a way to keep the error from happening at the source.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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Most people go to work to do their job. When a company becomes focused on continuous improvement, that is no longer enough.

The true turning point of a company on its Lean journey is when employees begin to take personal responsibility for making their own work better. Obviously this means that managers need to let go of the feeling that they are the ones that dictate how work is done.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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One of the barriers to both creating flow and providing value is that companies are not organized to do either effectively. They tend to have their management system set up in functional silos. To deliver something to the customer it must cross several managerial boundaries. Each manager has his or her own budget and agenda.

Instead, companies should map their value streams so they can better understand how to get products to customers in the best way. They should also organize their management system by value stream so leaders can think globally instead of functionally.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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Taiichi Ohno, the father of modern Lean is credited with saying something to the effect of “without standards there can be no improvement.” While the translation may not be exact, the gist of it is what is important.

The first problem is that if there is no standard, it is impossible to recognize when an abnormal condition presents itself. The second issue is that if you do recognize that something is wrong, how do you make a change to something that is always changing? Standards provide the foundation so you are not chasing a moving target when making improvements.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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Flow is a central concept in Lean operations. It is basically the premise that work should never sit. With this as a target, several things happen. The first is that lot sizes are reduced. Work doesn’t flow if it has to wait for a production run to be completed.

Flow also drives waste reduction. The things that prevent flow all tend to be wasteful and costly. Excessive distances between processes, waiting time, poor parts quality, and the like are all reasons why batching is commonplace. The only way to achieve flow is to relentlessly remove that waste.

In addition to the obvious cost benefits, operations that flow move much more quickly. The lead time from when a customer orders a product until they have it in their hands is much shorter in a production process that focuses on flow.

ABOUT CONTINUOUS IMPROVEMENT TRANSFORMATION PRINCIPLES

CI Transformation Principles are the guiding rules that apply to all companies that are trying to make changes. They are similar to natural laws. Learn more about how principles guide your Lean journey in our entry on ‘Principles and Values.’

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The Gotta Go Lean Blog focuses on Lean at the front line. We help managers and employees work together to make Lean more productive for the company, and jobs more satisfying for workers.

To help you make your continuous improvement efforts more effective, our Lean blog offers a variety of different types of articles. You may see traditional articles, Lean terminology, videos, and podcasts.

We like to think the Gotta Go Lean Blog is unique in its style and content, but we also stand apart from other Lean blogs in one major way. We link our content to The Continuous Improvement Companion,our award-winning online reference guide, so you are never without detailed information about the topics we talk about.

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