Lean Thinking Saatchi & Saatchi May 14, 2008. Lean Thinking? 3 core elements Value (becoming customer-centered)Value (becoming customer-centered) Flow
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Lean Thinking Saatchi & SaatchiMay 14, 2008
Lean Thinking?3 core elementsValue (becoming customer-centered)Flow (engaging people around lean processes)Mastery (continuously improving and innovating ourselves and our work)
The Subway exampleThe Subway differenceTypical fast food?
The value stream- 3 key componentsSeamless executionCharacterized by the absence of waste Related activitiesIntegrates activities to benefit the customerCreate value for customersActivities are aligned to a common purpose serving customers
Value Case StudyTeam Exercise
Returns over 10 years: Customer-focused136%Shareholder-focused117%Balancing Stakeholders 84%
The customer-focused culture performed best. Why? Provides a value focus employees know what adds value and what doesnt (waste)Long-term vs. short-term orientationPurpose (serving others) provides a catalyst for high performance with people (more meaningful)
A customer-centered world. Why?Capacity exceeds demand in most consumer product areasAbility to comparison shop enhanced significantlyCustomers are more sophisticated Getting used to a higher standard of serviceMore interested in a total solution (lives are so hectic)
Chairman S. Toyoda in 92Toyota has always been a company devoted to enhancing the quality of life for people around the world by providing useful and appealing products. In the years ahead, we must accompany our growth and development as a corporate citizen of the world with unflagging efforts to help resolve the pressing issues of our time
A year later . . .Growth is good. Its essential to economic and industrial vitality. But growth without purpose is no good for anyone. Our purpose at Toyota is to provide customers with quality products at affordable prices. This is not altruism. Its simply a matter of recognizing that our own long-term interests coincide with the interests of people and companies in the markets we serve.
Making the formula work: ETPVFEasy to pull value fromAcknowledges that customers ruleWay more than an 800 numberOften requires rethinking the purpose and processes of a companyPuts people at the center of the stage
The opposite of ETPVFWhat does that feel like?Customers find it difficult to interact with youIt feels like a maze Customization and specialized orders are almost impossible Lack of flexibility in dealing with any request outside your normal proceduresYou dont feel like you are known or respected
The responseCreate a single interface Makes it easy for customers to pull value throughBuild accountability within your organization around the things that customers value
Remember, value is not . . .. . . the classic, product-centered view of the world . . . believes that customers merely want high quality products at a fair priceThe reality is that customers dont want your products they want solutions
How do we understand value from a customers point of view?What do customers do with our products and services after they receive them from us?What problems are they trying to solve with our products / services?What more can we do to help them solve these problems?
Flow-delivering value Value adding activities that are integrated into a complete value stream
Let it Flow. . .Flow making everything work without interruptionFlow or synchronization always produces lower cost, higher quality, higher customer satisfactionManufacturing flow is well understoodBusiness process flow is not
The reality: our processes dont flow?
Why is flow the goal?Always produces lower cost, higher quality, higher customer satisfaction
FlowCapitalizes on the power of process -- in the form of value streamsValue streams: The seamless execution of related activities that create value for customers
Why do we focus on value streams?Value streams allow you to organize the business around the customerTraditional organizations also tend to structure around functions which compete with value streams for attentionTraditional organizations allow waste to dominate hides the true value
Major Sources of WasteLocal optimization (silos)Push activities (batching, programs, one-offs)Non-Lean actions (promotions, price cuts, end-of-month sales push, etc.)Non-Lean behaviors (controlling, withholding, failure to listen, lack of openness)Un-balanced operations (failure to see business as a system)
Finally-MasteryThe art of making people matter mostDevelop a culture of continuous learningProvide the skills and supporting culture to both continuously innovate and improveHighlights empowerment, teamwork and collaboration (and rewards these behaviors)
Mastery follows Value and FlowIf an organization is successful in achieving Value and Flow, then activities become more transparent Enables individuals to more easily focus on improvement and innovation, resulting in the pursuit of Mastery
Continuous learning -- the Differentiator Behind Toyotas Manufacturing ExcellencePlan -- Set goals, create action plansDo -- ImplementCheck -- How is the plan going?Act -- Act on the answers
In reinventing our approach to knowledge work . . .. . . we created PDL (Plan-Do-Learn)
Plan-Do-Learn helps us to apply.The principles of Value, Flow, and MasteryTo our biggest challengesUtilizing a continuous learning cycleIn a people-centered way
Introduction to PDLTeam Card Sort Exercises
The Six Steps of PDLGrasp the situationSelect the best alternativeBuild the planImplement, monitor, and adjustMeasure and analyzeLearn and continue the next cycle
Grasp the situationWorking at the top of the funnel
What appears to be the problemIs not!
What appears to be the solutionIs not!
Where do you start?= one idea
How do you generate new thinking?
Define Current and Desired States 5 Whys Genchi Genbutsu New Idea Generation TechniquesBenchmarking
What type of values required to make this work?
Participatory ValuesOpportunities to participateOpportunities to fully understand the problemOpportunities to contribute to the solutionBenefitsMutual understandingShared responsibilityTeam capabilities
Best represented in a hierarchy
How do you select the best alternative?Work toward ideal stateDont have to agree to understand -- dialogueBuild shared context -- meaning
Build the PlanValue-added goals & meaureables definedProject scope definedPlan fully developed (resources, schedules, accountabilities & supporting work plans)
Implement, Monitor, and Adjust
The plan is implementedAdjustments made on an on-going basisCharacterized by a bias toward action and flexibility in responding to necessary changes
Measure and Analyze
Collect data identified by measures developed in the planAnalyze key findings
Learn and Continue the Cycle
Learn from results and adjust the planCharacterized by a willingness to learn deeply
Practical Take Aways
Relentlessly focus on the customer, TMS, Divisions, Dealers, ownersGenchi Genbutsu Understand Value from the customers perspectiveFocus on the root cause, or larger pictureNot just what Toyota is asking us to do but also what opportunity/problem is Toyota trying to address
Practical Take Aways
Build descipline into the process - Use PDLValue added goals and measuresFully developed plans (resources, schedule, accountabilities)Learn (adjust as required, build on knowledge)
Cooking with KerryAdding another couple?Teams have to get to this integrationPutting cars on truck beds