BUSINESS

TURNAROUND

LEADERSHIP

To quickly turn around a struggling business...

The organization will go where the

leadership takes it

Use the right tools

Follow a process

Key Points To Remember

Who We Are

Lean & TOC: Turnaround Hybrid

Haikaku vs. Kaizen

Steps to Leading a Business Transformation

Agenda

• Service Academy

• Active Duty Military

• Automotive – High Volume Low Mix

• Industrial – High Mix Low Volume

• Turnarounds & Continuous Improvement

Bob and Torrence

Experience

BS Engineering Management West

Point Class of ’91,

MBA City University of Seattle 1996

4 Years Active Duty Army,

3 Years National Guard,

Army Combat Engineers

22 years progressive

leadership and continuous

learning

Ford Motor Company, Mitsubishi

Caterpillar Forklift America,

Energy Alloys, Weatherford and

(Professor of Economics)

Revolutionary

and evolutionary

change leader

BS Industrial Engineering, West Point

Class of ’92,

Private Equity Experience

4 Years Active Duty

Army Infantry

21 years progressive

leadership and continuous

learning

Delphi Automotive, Steelcase,

Monomoy Capital Partners, and

Weatherford

Revolutionary

and evolutionary

change leader

BOTO

Bob

Torre

nce

Improvement Methodology Military Equivalent

Standard Work Standard Operating Procedure

Plan, Do, Check, Act Crawl, walk, run, After Action Review

Target Condition Commander’s Intent

Systems Thinking Battlefield Operating Systems

Improvement Kata Leadership Counseling

Core Problem ‘Schwerpunkt’ Decision Point

Experience

High Volume Batch Production Low Volume Make to Order

Teach one method Teach several methods

Detail is less important Detail is essential

Inventory accuracy of secondary importance Inventory accuracy of primary importance

“Command and Control” Flexible and Dynamic

Change is gradual and over time React daily to real time change

Check the reports Go to the Gemba

Manage process & takt time Manage standard hours, training matrix & knack points

Flow created with a rigid process Flow created by comprehension

Experience

Lean and TOC: Turnaround Hybrid

• Theory of Constraints: Global approach,

focused on resource subordination to achieve

discrete, focused changes with global results

• Lean: comprehensive system for rapid or

progressive change

Complementary mutually supportive systems

with varying tools and mind sets.

• Implemented in parallel and in sequence

TOC Approaches: Constraints and Conflicts

• Constraint management: Identify the

system’s constraint(s) and subordinate

everything else to exploit it

• Resembles lean Haikaku in its emphasis on rapid

change

• Systems analysis: Identify opportunities or

expose conflicts through the diagramming of

opposing goals and assumptions

• Makes explicit the roadblocks to change

Lean Approaches: Haikaku and Kaizen

• Haikaku: Japanese term for revolutionary

change in an organization

• Lean Leaders of this type generally appear

to be aggressive Change Agents

• Kaizen: Japanese term for evolutionary

change in an organization

• Lean Leaders of this type generally appear

to be consensus building Coaches

Do You Need Haikaku or Kaizen?

Change Agent Leader Coaching Leader

Aggressive Group consensus

Quick Steady

Impose order Teach

0-6 months turn around focus Longer term

Department or Function Head Value Stream Manager

Do You Need Haikaku or Kaizen?

Change Agent Questions Coaching Questions

Is the leadership adequate? Is the process defined?

What is the Vision, Mission, and Values of the organization?

Is action being taken to create value, flow and pull while taking out waste?

What are the customer pain points? Are the people engaged and making it better?

What are the top three bottlenecks? What is the standard problem solving methodology used?

Steps

1. Assess Leadership

2. Impose Stop-Gap Measures

3. Create or Enhance Vision, Mission, Values

4. Establish High Level Goals and Metrics

5. Use A3 for Communication

6. Impose Change Quickly in a Sustainable Manner

7. Transition from Haikaku to Kaizen

Step 1: Assess Leadership

• “Everything Rises and Falls on Leadership” John Maxwell

• The organization is a direct reflection of the

leadership

• Review organization structure

• Review leadership functional competence

• Assess leadership values, attitudes, and

willingness to change

COPYRIGHT 2013 BOTO SPEED PAGE 12

Step 1: Assess Leadership

• Change out inadequate leaders quickly

• Hire or promote leaders that buy into the

change effort

• Hold leadership meeting to begin team building

• Identify leaders who are willing to help others

• Willingness to use the A3 format

Step 2: Impose Stop Gap Measures

• Subordinate all resources to the one or two top

failure modes

• Address underperformers directly

• Implement standardized work and work

instructions to stabilize processes

• ‘Mine’ existing resources and assets that can

help your efforts

• Create flow = create cash

Step 3: Vision, Mission, Values

• Visions are for internal use and give

employees a sense of purpose and direction

• Missions are outward facing to illustrate to

customers and stakeholders the purpose of

the organization

• Values guide all behaviors, decisions and

actions

Vision, Mission, Values example Vision:

To provide a safe and enjoyable working environment where our employees can grow personally and professionally by building quality products on time with integrity and pride.

Mission:

To build and deliver defect free, and on time oilfield products enabling Weatherford Operations to exceed customers’ expectations by continually shortening lead times and bringing new products to market at the required volumes and competitive costs.

Values:

Do the right thing

Build Strong Relationships through Respectful and Honest Communication

Customer’s Needs Drive our Actions

Just Good Enough is Never Good Enough

Individuals Commit to Team Success

Step 3: Vision, Mission, Values

• Leadership must be committed to the Values by living them out loud

• Values and resultant behavior by the leadership will determine the organization’s culture

• Develop slogan that encapsulates the Vision, Mission and Values and use at every opportunity

Step 4: Goals and Metrics

• Identifies the overall goal

• Delineates Critical Success Factors (CSF) and Necessary Conditions (NC)

• Ensures you’re working on the right things

• Confirms causality

• Populates the Lean A3 with ‘target conditions’ for subordinate leaders

COPYRIGHT 2013 BOTO SPEED PAGE 17

The Intermediate Objectives (IO) Map

Step 5: A3 Thinking

• Structures the Plan, Do, Check, Act (PDCA) methodology building to a ‘target condition’

• Objectives from the IO Map set by the manager

• Methods and approaches identified by the team member

• Identify action item ‘experiments’ and capture the results of the action

• Gives flexibility to the ‘how’ while maintaining the ‘where to’

• Creates confident and self reliant team members

• Duplicates the kaizen mindset

COPYRIGHT 2013 BOTO SPEED PAGE 17

Step 6: Impose Change

• Part of improvement kata is

understanding current state.

• CRT can be used to explain

current state

• CRT diagrams cause(s)

making them explicit

• Core causes can then be

broken with the evaporating

cloud

PDCA & The Current Reality Tree (CRT):

Step 6: Impose Change

• Assumption: reduction inventory will reduce our cash spend

• Assumption: increasing inventory will reduce our lead time

• *Assumption: inventory can be evaluated as individual components

• *Assumption: all inventory is the same

Make the business

successful

Reduce late lines

Increase on hand inventory

Reduce on

hand inventory by $$M

Reduce cash spend

INJECTION: increase stock of long lead time parts, while

reducing overall spend

Evaporating Cloud: Inventory Spend

Step 6: Impose Change (example)

• Assembly plant requires 100% of components to

complete the final build

• Executing formal rework inventory transactions

• Coding material lot status for accurate availability

• Effective use of forecast, consuming forecast, tying

forecast to customer orders

• Improving protection of product and material storage

• Reducing Work In Process

• Actively managing long lead time parts

Material Control: All or Nothing

Step 6: Impose Change (Create Flow)

• Flow takes place in the mind as well as on the

shop floor

• Team members who are ‘in the groove’

experience flow

• Flow is only possible when expectations are

clearly understood

• Creates a feeling of control over their

environment within the work force

• Allows team members to see the next target

condition, and sustain the change

Step 7: Transition

• Rebuild team

• Focus on discipline to new or existing

processes

• Develop “onboard training” for consistency and

repeatability

• Collaborate more on smaller changes

• Create a Continuous Improvement Mindset

• Requires safe environment to challenges processes

and practices

Step 7: Transition

• Expect more turnover

• Processes and systems should be strong enough to

endure

• C Players will be uncomfortable and seek shelter

elsewhere

• Set New Target Conditions (Goals Change –

Values Stay the Same)

• Stagnated performance to be met as an opportunity

to use new CI skills

• Get people energized around their contribution to

the next break through improvement

To quickly turn around a struggling business...

The organization will go where the

leadership takes it

Use the right tools

Follow a process

Key Points To Remember

Questions

Resources

• “The Goal” Eli Goldratt.

• “The Logical Thinking Process”, H. William Dettmer.

• http://www.lean.org/womack/DisplayObject.cfm?o=741

• http://www.lean.org/images/october_webinar_project_slides.PDF

• http://www.lean.org/womack/DisplayObject.cfm?o=729

• ”Flow: The Psychology of Optimal Experience”, M. Csikszentmihalyi.

• “Toyota Kata: Managing People for Improvement, Adaptiveness and Superior Results”, Mike Rother.