Essentrium offers various paths to make your organisation prosperous with engaged and competent employees that help you to reduce costs and lead time and improve quality. All of this with enthusiastic and committed employees.
What a healthy functioning organisation looks like
When the now retired mister Isao Yoshino started as an apprentice at Toyota almost 50 years ago, he was made responsible for mixing paint components. He was instructed on how to mix the components by his supervisor. After receiving his instructions (TWI Method), he was left alone to perform his job. Not long after that there were complaints about the car paint not drying correctly. His supervisor went to young mister Yoshino and apologised for he apparently did not instruct Isao correctly. Isao was NOT blamed for the mistake, and put at ease!
With trust established, they focused on the process and quickly found out that there were two almost identical tins on the shelve. Isao Yoshino had accidentally used the wrong tin and thus the wrong component. In a normal organisation, this would be the end of it. Young mister Isao Yoshino would have learned not to use the wrong tin! This would go into the error report as “solved”.
Not so at Toyota! Together they looked at the root cause and various counter measures. They decided to rearranged the shelves to ensure that all the required components were grouped together and the two tins would never be standing next to each other again. They also marked the two tins more clearly and updated the procedures. This way, not just Isao Yoshino would never make this mistake again, but everyone after him as well. This reduces errors, stress due to fear of making a mistake and costs.
* Thanks to Katie Anderson who interviewed mister Isao Yoshino.
Why do you describe many of the details on your website?
Aren’t you giving away the secret sauce? Oh yes! By reading about the background and approaches, you could start with LEAN yourself. It won’t be easy and you will probably make mistakes, but hé, that is what the whole concept is built upon.
The main reason is to prevent (fake) LEAN implementations that only focus on the tools and ignore the importance of an appropriate organisational culture. These tools focused implementations are often disappointing for both the employees and leadership. Why? Continue reading…
“Culture eats strategy for breakfast” (Peter Drucker)
During my work in Vienna, Geneva and New York, I became interested in the psychology of leadership and the subtle but important effects this has on issues like happiness, absenteeism, staff turnover, cooperation, learning & development and continuous improvement. My study Organisational Behaviour in the USA confirmed my observations and experience as a leader. Once I returned to the Netherlands, I needed a way to share this valuable lesson.
During my work in Vienna, our CEO, Sir Peter Job, would visit our office from the HQ in London twice a year. After his meeting with the country manager, he always took one or two hours to meet the employees at their desk. He was very open and would ask us what we were happy about, but also what was bothering us. I had several one-on-one meetings with him at my desk. During one event, I mentioned how I was struggling with the fact that we were wasting lots of money locally, which didn’t become visible in London. He kept on asking questions and what I proposed as a solution. A few months later that solution was implemented and the waste in (now avoided) overtime fell dramatically in all the countries around the world, whilst the quality and customer feedback improved.
A psychologically safe environment is required to achieve true cooperation and continuous improvements. The positive side effects on happiness, absenteeism and staff turnover only makes this method more powerful.
My experience and practical research in psychologically unsafe environments has taught me why many well meaning (improvement) projects and training programs almost never achieve their stated objectives.
So is creating a psychologically safe environment enough? No, just creating a psychologically safe environment alone isn’t enough. The mounting frustrations of lacklustre performance and progress in such an environment will eventually lead to a crisis. The usual management reflex to these kind of crises is a fall back to a directive leadership style. Engagement, trust, cooperation and personal improvement initiatives are the first to suffer from this and progress comes to a hold.
Toyota, and many other companies, have shown us that long term success requires TWO equally important factors.
- a psychologically safe environment with strong employee engagement, trust and self-initiated continuous learning and development.
- a structured improvement method that utilises the experience, skills and knowledge of the employees and their managers to improve safety, flexibility, speed, quality, lead times and joy, whilst reducing dead capital, waste, cycle/process time, errors and problems.
Essentrium was founded to share my love for the combination of this culture and improvement method as it makes work so much more fulfilling for everyone. As a side effect this leads to lower absenteeism, healthcare costs, staff turnover and higher revenues as a result*.
* Higher revenues are not the objective, but a result of optimising all the processes that affect the revenues, speed, quality and costs.
LEAN training and consulting
Essentrium combines many years of real world leadership experience (Manager, Director, CEO) with LEAN/TPS awareness, training and consulting to support (family owned) small and medium sized businesses on their path toward a different and more fulfilling way of running their business. Essentrium operates internationally.
- The objective of LEAN/TPS is to work: Safer, Easier, Better, Faster and Cheaper with higher quality products.
- Other objectives are to reduce: Raw materials, Inventory & buffers, Energy, Lead time and as a result Cost and Stress.
- The objective is NOT* to reduce the number employees as shorter lead times with higher quality and lower costs will in most cases lead to higher demand.
* Unless people refuse to adapt to this new way of working (extreme care is required in this process).
The original philosophy behind what is called LEAN comes from Dr. W. Edwards Deming. Deming visited Japan just after WWII and helped Japan change from a country known at that time for poor quality knock-off’s to high quality brands in a short period of time. The Deming philosophy, which Toyota implemented and further improved, is known as the Toyota Production System (TPS). Toyota generously allowed American consultants to learn how they achieved their successes. This was brought to the USA under the name LEAN. The American consultants noticed all the analyses and methods used, but didn’t realise the importance of the corporate culture. Without this culture, improvements are hard to implement and even harder to maintain. The lack of a supporting culture is why various high profile LEAN projects failed.
A psychologically safe corporate culture is extremely important when we want to achieve real continuous improvements. This culture must be actively supported from the top down and can’t be “delegated” to middle or lower management.
So why is a caring, just and psychologically safe culture so important?
As someone who had to manage multiple teams in a very competitive and toxic corporate culture, I’ve seen first hand what the effects can be. With a lack of trust in a blame based environment you can experience some or all of these following issues:
- People start hiding errors and failures as this reflects poorly on their review.
- The longer it takes before an error is detected, the costlier it will be to correct (IBM Research).
- Due to fear, employees are not really cooperating when an error is investigated.
- As a result the root cause(s) can’t be determined correctly.
- Managers are constantly fire fighting because the root causes are never addressed and errors keep repeating.
- Affected employees are instructed to never repeat the error again, but without fundamental improvements other employees will repeat the mistake.
- Employees are stressed due to the the fear of making a mistake.
- The employees are constantly pressured between high quality and fast pace.
- High quality and high performance aren’t opposites in this system. Performance is not (or at least less) dependent on the employee, but defined by the processes. Improve the process to equalise the performance between high- and low performers.
- Employees don’t share tips and tricks as this could improve the ranking of their colleagues, thus lowering their own relative ranking.
- High ranking employees can sometimes prevent improvements since this will level the performance.
More than 20 years ago, by using the principles of Dr. W. Edwards Deming’s philosophy, I was able to establish trust and a psychologically safe culture inside my own departments (within a large Anglo-Saxon style company). Based on that experience, I started Essentrium to share this essential (and growing) management philosophy. Deming’s philosophy has many similarities with “Rijnlands organiseren” (the Rhineland organisation model) and is quite different from the traditional Anglo-Saxon business model.
How does a “Just” and “psychologically safe” culture work?
- There is a clear differentiation and approach between “unwanted/toxic behaviour” and “performance issues”.
- Performance issues (errors or slower work than expected) are investigated at the process level, NEVER blaming the employee.
- Unwanted/Toxic behaviour is investigated as well. Support and alternatives are provided (e.g. problems at home). Behaviour must stop immediately!
- After a root cause analysis, the employees and their manager eliminate the cause of the error together building on their mutual strengths, experience and needs.
- The standard work procedures are there to support the employees and to make their work safer, easier, better and faster, not to blame them. This reduces stress.
Just being nice isn't enough!
Despite all the articles about how happy employees are more productive, just being nice to your employees alone isn’t enough. You end up with employees who don’t know how to prevent mistakes other than being extremely vigilant. Problems aren’t structurally analysed and corrected and the same mistakes are made over and over again. The supervisor is running around fighting fires all day (and becoming very good at that). I once worked in a large company where fire fighting was seen as very pro-active and a highly valued skill. Leaders were even assessed on their fire fighting qualities in the 360° feedback process.
In order to be successful, you also need a system to eliminate the errors, improve the processes and share and foster the learning experience. Improvements must be made to the processes after every mistake or error. You have to do these root cause analyses TOGETHER!
Just implementing improvements in a traditional “top-Down” fashion by a “process improvement specialists” and without actively involving (and training) the employees, doesn’t work.
- The “Top-Down” improvements most likely are not optimised for the actual work.
- “Work as imagined” versus “Work as done”.
- Managers most likely will complain about cumbersome procedures and put pressure on employees to speed things up, creating non-conformance.
- As soon as the process specialist leaves the department to focus on another department or company all further improvements stop (learned helplessness).
- Employees have not learned to “see” the mistakes and waste in the process, let alone how to analyse and improve them.
- A general lack of trust that the improvements will not lead to a reduction in staff. Employees thus forestall or sabotage improvements out of fear.
- Process conformity will be low leading to a continuation of the errors that were supposed to be eliminated.
- In case of a serious problem the demanded shortcuts (non-conformity) to speed things up, are used against the employees. Leading to stress and fear.
Once the employees, together with their managers constantly improve their own processes, because they understand and believe in the objectives and culture, process conformity will be very high. They have developed the improved processes themselves in order to make their work less stressful, safer, easier, better and faster.
Helping employees to address roadblocks and scheduling conflicts
Some employees, especially those who are part of multiple projects, will have a tendency to be too optimistic in their progress reports. Again, a honest and trust based relationship will help project managers to sit down with the participants to discuss the scheduling conflicts and roadblocks. It is important to again have a broader system view to see the various interdependencies. Ask non-threatening questions to truly understand the interdependencies and conflicts and digging deeper by using the “5 Why?” technique. Just putting pressure on employees is only going to work short term and will inevitably lead to problems in other tasks that also need attention. The goal is to truly understand the roadblocks and to develop different approaches and countermeasures.
I’ve seen many examples where managers “solve” resource shortages by adding more people. This doesn’t address the underlying multitude of problems in systems, processes and flow and adds complexity due to the increased number of hand-off’s. Having too much work is the ideal starting point to improve processes and flow albeit difficult due to time constraints. In those cases an external process improvement expert can make initial improvements to regain control as long as the employees will get involved once the crisis is over. Toyota has a name for this “hurry and wait” phenomena. It is called “Mura” and describes unevenness in an operation. The other two M’s are Muda, an activity that consumes resources without creating value for the customer, and Muri, a structural overburdening of equipment or employees.
Happiness is not the absence of problems.
It's the ability to deal with them.
A complaint or an error is a gift
We’ve probably all seen this quote before. “A complaint is a gift“. In many companies management and employees do not want to be confronted with problems. They have enough other problems to deal with. When you walk the floor in these companies everything seems to be working. Until you dig a bit deeper. Then you find lots of unresolved problems because they are either ignored, constantly corrected or hidden. When you observe a Toyota production line, you will notice that the employees will stop the line every now and then because something wasn’t correct. Does this mean that Toyota has more problems? No, the opposite is the case! It just wants to see every problem and deal with it immediately.
Toyota and true LEAN companies are different. They see every error or problem as a gift. The error is analysed and corrective actions are created to avoid that error in the future. Once no errors are found any longer, the system is put under stress by e.g. increasing the production capacity or reducing inventory or buffers, just to see where the system (not the employees) creates new problems again. This makes the system robust. Large inventories or process buffers are a sure indication that the processes aren’t robust and well balanced. When the production is running too fast for the employees, they will investigate ways to make the work easier, so that employees can work at a normal pace.
When employees complain about the workload, many organisations will “solve the bottleneck by adding more people”. This is a standard reflex. Not within LEAN. A complaint about a high workload is the ideal trigger to look at ways to make the work easier, better and faster without working any harder.
Systems thinking is looking at the whole system instead of the individual components that make up the system. Well meaning managers might have increased the capacity of their individual department, but this does (in most cases) NOT improve the overall capacity of the organisation. Systems thinking and the Theory of Constraints will help to ensure that valuable capacity is created (not by adding machines or people, but by improving the processes) where it has the highest impact.
Even though the LEAN/TPS philosophy is based on common sense, we will need to start to think differently as many worn in habits from the classical Anglo-Saxon management methods, like traditional cost accounting and a lack of systems thinking, prevents us from doing the right things.
In traditional cost accounting, you reduce the cost per item by spreading the machine investment and other fixed costs over as many parts as possible. For that reason machines must be running as fast and as long as possible and every minute “costs money”. This holds true when the machine produces stand-alone articles and market demand is higher than the maximum production capacity. When the article is a piece of a larger product however, then the production level should be synchronised with all the other production machines. Otherwise you end up with large unused stock which needs space and managing.
Large stocks are to be avoided for quality reasons as well. Many machines tend to drift, leading to products that are potentially out of tolerance. With large stocks, it might take months before the produced pieces are actually assembled. When you detect a problem during assembly, your complete stock might be affected. Toyota’s aim for one piece flow with minimal buffers is a way to ensure synchronisation between production lines and to avoid quality problems going unnoticed for days, weeks or even months. This means that machines are not always running, but only when there is actual demand. By using the same machine for different parts, you can still try to optimise the Overall equipment effectiveness (OEE). Many companies don’t do this since the conversion from one product line to another often takes hours. Within LEAN the machine conversion process is optimised and many machines can be converted within 10 minutes or less, often with only one or two people. You can compare this with changing tires at you local garage which takes 30 minutes and changing tires during a formula 1 race with takes less than 2 seconds nowadays.
Another counter-intuitive approach in LEAN is that almost all decisions are NOT made in the boardroom, but on the work floor. That is the place where all the information to convert the plans into reality are present. Taiichi Ohno (Toyota) often sent his students to the work floor just to observe for hours in order to truly understand and appreciate the complexity and interdependencies.
Another way in which LEAN/TPS is different is that the whole method is designed to find as many mistakes and problems as possible. Once the problems have been resolved, the system is put under stress until it starts to produce errors again. When employees have difficulties keeping up, they find ways to make their work easier and better suited. Employees are never blamed for performance issues, nor put under pressure. Everything is addressed by constantly improving processes and making the work easier and lighter.
Employees are not your problem, they are your solution.
Continuous learning and using the expert knowledge and experience of the employees in addressing problems. The aim of LEAN/TPS is to continuously learn and develop expert knowledge and experience through small experiments based on the A3 analysis. Not all experiments will lead to success at first. That is why a caring and just culture is key to the success. Developing knowledge and skills in a continuous way becomes second nature and makes the organisation less dependent on external experts or training.
There are often certain (overlapping) phases in a LEAN/TPS journey.
- Building trust and a just work environment, addressing unwanted behaviour so people are not afraid to do small improvement experiments.
- Address rework, machine breakdowns and non-standards through A3, Kata, fishbone, preventive maintenance (they have the biggest impact on flow and cost)
- Improvements by reducing waste and movements with A3, Kata, 5S, Gemba walks, standard work, spaghetti diagram, Value Stream Mapping, Visual Management, SMED, etc.
- Optimisation by balancing processes, process/cycle and takt-time, variation, 3:1 & 1:3 rule, inventory & buffers, pull system, one-piece-flow, and predictive maintenance.
A LEAN/TPS journey will NEVER end! You will reach certain milestones, but continuous improvements and optimisations will continue forever. Requirements, systems, machines, raw materials, regulations and new challenges change on an almost daily basis. So should your organisation and their processes. That is why it’s important that employees and all managers are well versed in root cause analysis and can develop the “The current best practice” to address the problems on a daily basis. This makes you organisation flexible and independent of most external consulting and training.
Sometimes, and certainly with automotive (ISO/TS 16949) and medical (ISO 13485) certifications, the LEAN/TPS flexibility seems counter to the certification requirements. Indeed automotive and medical certifications need a re-certification for any change in the process. This makes continuous improvements very expensive. However, the documentation on A3’s and standard work can be perfectly in line with the ISO 9001 guidelines.
Is continuous improvement right for every situation?
Unfortunately, continuous improvement is not the panaceum for all problems. When you challenge employees to improve the lead-time by e.g. 5%, they will probably look at solutions like “working just a little harder”. When you repeat this year after year, without actually improving the underlying processes, people will end up with a Burn-Out.
However, when you ask them to improve the lead-time by e.g. 50%, they will realise that they must be thinking outside the box. A 50% improvement can’t (easily) be achieved by just incrementally improving the old way of working. You will need to innovate, which is different from improving.
This is called a BHAG (Big Hairy Audacious Goal, introduced by Jim Collins) and forces people to think outside the beaten path. Even when they only achieve 35% after a year, this result should be celebrated, and never looked down upon. The objective was not to achieve the 50%, the objective was to approach the problem with radical new ideas.
Example: When Toyota developed the Prius, they had roughly three options.
- Take a standard car and just add an electric motor and batteries but leave the IC-engine and drive train.
- Replace the whole drive train with an electric motor and use the IC-engine only to charge the batteries.
- Remove the IC-engine and drive chain and make it pure electric.
What Toyota selected was option number 1. This was closest to what they knew (incremental improvement). Option 2 was already a major redesign and option 3 (Tesla) was way too radical.
Each implementation is unique
The system that Toyota perfected over more than 70 years includes many tools to analyse errors and waste in a company or organisation. Which tools to use and how to use them depends on your organisation. Each LEAN/TPS organisation has to develop their own unique implementation which is tailored to your specific needs and requirements. LEAN/TPS has been developed within the production industries, but the philosophy and many tools can be used successfully in other fields like healthcare, service industry, hospitality, transportation, etc.
Many managers have no idea how much time is wasted in waiting, poorly matching processes, looking for the right documents/information (I measured almost 20% search time in one very large Telecom company. That is one day a week!), etc. One way to find out how much time is actually wasted is to place a priority order and say that this is for the general manager’s wife or brother and (s)he needs it asap (not truly honest as they might be pilfering from existing orders).
Interested in learning more?
Want to learn more on how you can reduce stress and improve the spirit, health and well-being of your employees whilst reducing cost and lead time? Don’t hesitate to call or write. You will find the contact information here, or on the contact page.