Lean leaders changing corporate agendas
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This document discusses how corporate agendas can stifle lean thinking and provides examples of lean leaders who changed corporate agendas. It explores the basic language of corporate agendas and six schools of thinking that hinder lean, such as short-term focus, either/or thinking, and disrespect for production staff. Case studies of lean leaders like Art Byrne and Dr. John Toussaint demonstrate how changing metrics and empowering staff can improve both profits and outcomes. The document advocates studying lean management systems and getting involved in discussions to help shift corporate priorities towards lean.
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Lean leaders changing corporate agendas
- 1. 1
- 2. Consultant: We help organizations in all industries deploy Lean & build outstanding organizations. Author & Speaker: Karen Martin, President The Karen Martin Group Inc. @karenmartinopex 2 www.ksmartin.com/subscribe
- 3. Jacob Stoller President Stoller Strategies www.JacobStoller.com http://amzn.to/1J75O1Z 3 © 2015 Jacob Stoller
- 4. Welcome to the land of corporate agendas, where things aren’t always as we’d like them to be! 4 © 2015 Jacob Stoller
- 5. Today we will explore… • The basic language of corporate agendas • Six schools of corporate thinking that stifle lean • Examples of how lean leaders changed the game • How you can join the conversation about the needs of your leaders and your business © 2015 Jacob Stoller 5
- 6. © 2015 Jacob Stoller • Define expectations. • Determine compensation. Corporate agendas matter because they… And they must change for lean to go enterprise wide. 6
- 7. © 2015 Jacob Stoller Much of the agenda is about trying to control how outsiders will judge the organization. 7
- 8. © 2015 Jacob Stoller Money will always be an underlying issue in every corporate agenda. 8
- 9. © 2015 Jacob Stoller A few words about not-for-profits… Yes, this means you! 9
- 10. Proper Financial Priorities 10 1. Grow Margins (Profit) 2. Grow Top Line (Gross Sales) 0 2 4 6 8 10 12 2011 2012 2013 2014 Gross Sales Expenses Profit From The Karen Martin Group, Lean And Your Top & Bottom Lines
- 11. © 2015 Jacob Stoller Improving the financial picture Revenue Future Costs Variable Costs Fixed Costs $ $ $$ 11
- 12. © 2015 Jacob Stoller It’s not just money – balanced scorecard approach Vision & Strategy Financial Internal Business Processes Learning & Growth Customer 12
- 13. © 2015 Jacob Stoller Executive measurement tools Objectives Where are we going? Key Performance Indicators (KPIs) How do we measure success? Targets How much is enough? Initiatives How do we get there? 13
- 14. © 2015 Jacob Stoller Financial Objective: Reduce operating expenses KPI: Material costs Target: Reduce by 6% Initiative: Get volume discounts 14
- 15. © 2015 Jacob Stoller Internal Business Processes Objective: Streamline accounting department KPI: Days to close at month end Target: Reduce from 12 to 10 Initiative: New accounting software 15
- 16. © 2015 Jacob Stoller Learning & Growth Objective: Improve morale KPI: Employee satisfaction percentage Target: Increase from 80% to 85% Initiative: Employee newsletter, special events 16
- 17. © 2015 Jacob Stoller Customer Objective: Increase market share KPI: Net promoter score Target: Increase by 5 points Initiative: Customer service training 17
- 18. © 2015 Jacob Stoller There’s some good news here… 18
- 19. © 2015 Jacob Stoller And some bad… 19
- 20. © 2015 Jacob Stoller The challenge is that a lot of non-lean thinking gets embedded in these measurements. 20
- 21. Non-Lean thinking 1. Short-term focus 2. Either/or thinking 3. Disrespect for gemba & people who work there 4. Segmentation of purpose 5. Blind faith in automation & technology 6. Using GAAP accounting to run the business © 2015 Jacob Stoller 21
- 22. 1. Short-term focus • Obsession with annual, quarterly, monthly results. • Shareholder value is the law. • More emphasis on deal making. © 2015 Jacob Stoller Lean is a long-term strategy. 22
- 23. © 2015 Jacob Stoller 2. Either / or thinking Cost Profitability Quality Market Share 23
- 24. © 2015 Jacob Stoller Roots of either / or thinking Michael Porter’s competitive strategy matrix Nature of Competitive Advantage Broad Scope Narrow Scope DifferentiationLow Cost Focused Low Cost Focused Differentiation 24
- 25. Lean says… © 2015 Jacob Stoller We can improve these things simultaneously through continuous improvement. 25
- 26. 3. Disrespect for gemba and people who work there © 2015 Jacob Stoller Innovate Produce Sell 26
- 27. Lean says… © 2015 Jacob Stoller Production creates the value that people pay us for. 27
- 28. 4. Segmentation of purpose © 2015 Jacob Stoller R & D Production Customer Service Sales KPIs ≠ KPIs ≠ KPIs ≠ KPIs 28
- 29. Lean says… © 2015 Jacob Stoller We’re all in the value stream together. 29
- 30. 5. Blind faith in automation and technology • Paving cow paths • Locking in waste © 2015 Jacob Stoller 30
- 31. Lean says… © 2015 Jacob Stoller Fix the process first! 31
- 32. 6. Using GAAP accounting to run the business © 2015 Jacob Stoller Shame and blame Hold managers accountable for variances Compare projected against actual Manage to targets Forecast and Set Targets January February March April? 32
- 33. Lean says… © 2015 Jacob Stoller What a waste of time! 33
- 34. © 2015 Jacob Stoller Changing the Corporate Agenda 34
- 35. Art Byrne’s 10-Year Transformation at Wiremold © 2015 Jacob Stoller Up 14 Times Operating Income Gross Profit $30M to $770M 38% to 53% Valuation 35
- 36. Art’s Value Stream Metrics Metric (KPI) Calculation Customer Service Percentage % of orders delivered on time Productivity Sales / worker hours Quality Reduction in defects over previous year Inventory turns Cost of sales / average value of inventory Visual control Measured by quality team © 2015 Jacob Stoller There’s no room for segmentation of purpose or either / or. 36
- 37. Art vs. short term thinking • “From 3 to 20?” • The big leap of faith © 2015 Jacob Stoller 37
- 38. Art vs. GAAP Accounting © 2015 Jacob Stoller Real numbers, simple format (Orry Fiume) 38
- 39. Art didn’t manage the gemba, he managed in the gemba. • Respect • Empowerment • Trust © 2015 Jacob Stoller “Your people are your only asset that appreciates.” 39
- 40. Thedacare – Dr. John Toussaint Architect of a new management system for healthcare © 2015 Jacob Stoller 40
- 41. The Healthcare Conundrum © 2015 Jacob Stoller Financial Pressures Unacceptable Outcomes 41
- 42. In healthcare, either / or spells disaster. © 2015 Jacob Stoller Defects cost lives… So do delays. Together they account for 30% - 40% of total healthcare spend. 42
- 43. To solve healthcare’s thousands of problems, we need thousands of problem solvers. © 2015 Jacob Stoller 43
- 44. Segmentation of purpose is a show stopper, calling for a re-think of physician autonomy. • Safety over authority • Work standards apply to everybody © 2015 Jacob Stoller 44
- 45. Northwest Center – Tom Everill © 2015 Jacob Stoller Adding social purpose to the corporate agenda 45 “What I noticed in the corporate world is that nothing is impossible.”
- 46. The initial assumption © 2015 Jacob Stoller “Companies can either make profit or employ people with disabilities.” ?Profit Social Purpose 46
- 47. Tom’s hypothesis “Companies can both make profit and employ people with disabilities.” © 2015 Jacob Stoller 47
- 48. The conclusion “Companies can make higher profits because of their workers’ diverse abilities.” © 2015 Jacob Stoller 48
- 49. Results… • All divisions profitable. • Revenues up 500% in 3 years. • Tom hopes other employers will “get it” and put him out of business. © 2015 Jacob Stoller 49
- 50. Looking ahead… • Lots of lean activity since 2008. • Lean slowly gaining ground in business schools. • Better dialogue between lean and non-lean worlds. © 2015 Jacob Stoller 50
- 51. The tide may be turning on… • Shareholder value • Accounting practices • Tolerance of waste • Hierarchical management © 2015 Jacob Stoller 51
- 52. • Study lean as a management system. • Learn about business issues in your sector. • Join the broader conversation. © 2015 Jacob Stoller 52
- 53. At the end of the day…. © 2015 Jacob Stoller Lean has better answers! 53
- 54. Jacob Stoller President Stoller Strategies www.JacobStoller.com http://amzn.to/1J75O1Z 54 © 2015 Jacob Stoller
- 55. Questions and Comments? © 2015 Jacob Stoller 55
- 56. Karen Martin, President @karenmartinopex Blog & newsletter: www.ksmartin.com/subscribe © 2015 Jacob Stoller 56