Managing On Purpose John Shook Chairman and CEO Lean Enterprise Institute, USA Chairman Lean Global Network

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Managing On PurposeJohn ShookChairman and
CEOLean Enterprise Institute, USAChairmanLean
Global Network
Lean Institute Turkey December 3, 2013Bursa,
Turkey
www.lean.org
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The State of Lean 2013

• We intend to make the world a better place
  through Lean Thinking Practice
• 25 years of lean, 50 years of TPS, 100 years of
  flow
• Weve won some battles
• Auto industry
• Healthcare
• New frontiers

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State of the LIT Summit 2013

• Great progress since my first visit
• Excellent presentations from Turkish cos.
• Management level, operations level
• New sectors and new regions
• Important conversations I heard
• Worker-management divide
• National and corporate culture
• Terminology word games
• Lean Transformation how?
• How to make what to make why to make

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Purpose Achieved through Processes and People
Aligned by Management
Today
Purpose
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New United Motor Manufacturing, Inc. NUMMI
built its first car in December 1984 and its last
on April 1, 2010. NUMMI kick-started a
revolution.
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Joint Venture
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Lean Success in North America Agreement
between Toyota and GM Toyota manages the
plant via the Toyota Production System GMs
worst (certified worst) plant Quality Workf
orce Former GM workers offered jobs
Including the old troublemakers
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Results In about one year Quality
Best ever in GM Equal to Takaoka
Japan Productivity Best in GM Close to
Takaoka Japan
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Employee development Some Classroom Mostly
OJT or OJD TPS established Technical -
Physicals, hard technology - Product, plant
layout, etc. Social - Soft technologies -
Management/people systems (Note soft
doesnt mean easy!)
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Four lessons in leadership from NUMMI

• Establish mutual trust
• No problem is problem
• Lead as if you have no power
• Before you build cars, build people

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• It is an Organizational and
• A Personal Transformation.

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Lean Leadership

• is obviously different from the old command and
  control dictator.
• You can see that quickly
• It is equally different from the commonly
  accepted notion of the enlightened modern
  manager
• ? That part is less obvious

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Define Your Purpose Improve the Work, Develop the
People

• Get each person to take responsibility to solve
  problems and improve his or her job
• Ensure that each persons job is aligned to
  provide value for the customer and prosperity for
  the company

? Begin with yourself!
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Leadership Styles
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Lean vs Traditional Leadership

• RESPONSIBILITY-BASED

• AUTHORITY-BASED

• Focus
• Make the Right Decision

• Focus
• The Right to Make the Decision

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GM Fremont ? What went wrong?
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GM Fremont ? What aligned business purpose?
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Lean is a management system!

• to align
• Process
• People
• Purpose
• to create value

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Lean EnterpriseTransformation Model

• Whats the PURPOSE?
• How to improve the work?
• How to develop the people?
• What leadership role and
• management system?
• Whats the BASIC THINKING?

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The Toyota Production System
Best Quality - Lowest Cost - Shortest Lead
Time
Through Shortening the Production Flow By
Eliminating Waste
Just in Time The right part at the right time in
the right amount
Jidoka
Built-in Quality
Production Lines That Stop for Abnormalities
HEIJUNKA
Stability and Kaizen
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The Toyota Way
Customer First
Continuous Improvement
RESPECT For PEOPLE
Challenge Kaizen Genchi Genbutsu Respect -
Teamwork
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Lean Transformation Model
SITUATIONAL APPROACH - Value-Driven Purpose
- WHAT PROBLEM ARE WE TRYING TO SOLVE?
Responsible Leadership MANAGEMENT SYSTEM
CAPABILITY DEVELOPMENT Sustainable improvement
capability in all people at all levels
PROCESS IMPROVEMENT Continuous, real, practical
changes to improve the way the work is done
Basic Thinking, Mindset, Assumptions That drive
this transformation
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WHAT is our PURPOSE? What situational
problem do we need to address?
How to improve the work?
How to develop the people?

• What
• leadership
• behavior and
• management
• system do
• we need?

What is our BASIC THINKING??
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Transformation Model Questions

• What is our purpose or what problem are we trying
  to solve, what value to create?
• How do we improve the actual work?
• How do we develop the people?
• What role must leadership take and how does the
  management system support the new way of working?
  
• What basic thinking or assumptions underlie
  this transformation?

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Lean Transformation FMEAFailure Mode and Effects
Analysis
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Transformation FMEAQuick-Check
FAILURE MODE EFFECT CAUSE
PURPOSE
PROCESS
PEOPLE
LEADERSHIP
THINKING

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Transformation FMEAQuick-Check (examples)
FAILURE MODE EFFECT CAUSE
PURPOSE Agreement Conflicting policies Poor communication
PROCESS Quality Much scrap and rework Workers and leaders rely on final inspection
PEOPLE Right skill levels Dont perform jobs properly Unclear hiring standards no standard training
LEADERSHIP ? ? ?
THINKING ? ? ?

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State of the LIT Summit 2013

• Terminology alphabet soup
• TQM
• WCM (World Class Manufacturing)
• TPS
• Toyota Way
• Six Sigma
• Lean Startup
• Japanese terms two that matter
• ? KAIZEN
• ?GEMBA

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Lean
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People Process aligned by leaders to achieve
purpose
Leadership
People
Process
Purpose
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Lean EnterpriseTransformation Model

• Whats the PURPOSE?
• How to improve the work?
• How to develop the people?
• What leadership role and
• management system?
• Whats the BASIC THINKING?