People Process Technology Blog

Lean in Healthcare or ‘We’re working the wrong problem.’

Posted by: Ken Pilone, Sr. OD/Lean Consultant, TBD Consulting

With all the fuss about the ‘Obamacare’ legislation, it seems we have lost sight of the REAL problem here.  All of the attention seems to be focused on how to pay for our nation’s healthcare needs.  Rarely if ever do you hear anybody asking, "Why are health costs so high in the first place?" 

The question needs first to be asked, why providers charge so much.  While there are no easy answers, this much is clear:  The entire end-to-end process of providing health services is riddled with waste! 

There are at least two ways to look at the formula for making a profit.  The first and most common is, cost + profit = price.  You have only to look at the Post Office to see how this plays out.  Their motto might be, “Inefficient, no problem.  Just raise the price of a stamp.”  This formula doesn’t allow for any scrutiny into what drives cost in the first place.  The second formula, and the one most overlooked is, price – cost = profit.  This works well in highly competitive markets where price is more or less dictated by the customer and thus is essentially fixed. 

Think about it.  For any consumer product to have a chance at being successful in the marketplace, it shouldn’t cause sticker-shock for the customer.  For example, if I want to buy a toaster, I can expect to pay between $15 and $50 depending on features, brand, retailer, etc.  But, if I see a toaster on the shelf with a price of $200, I might react like, Jeez, I just want toast for Pete’s sake!  Does it also do my laundry? We’re not likely to be too sympathetic if the maker responds with, “Well, that’s just what it costs to make it plus a little profit.”  That’s not our problem!  If they can’t compete, well, then they have the right to go out of business!

Herein lies the rub.  When healthcare providers THINK and subsequently ACT as if they have no real competition, where is the incentive to look for and eliminate waste?  There is also a mindset working in this industry that cost doesn’t really matter to their customers (patients) because those big, greedy, money-grubbing insurance companies are going to foot the bill anyways.  Right?  We think it’s all their fault we’re in this mess.  And the finger-pointing ensues.

If we zoom out far enough, we can find some hope from this dilemma.  Ironically, there is a potential model right under our noses in the Emergency Rooms across the country.  The routines in place when an ambulance pulls up are very tight, efficient and well-rehearsed.  This is a completely customer-centered process.  All non-essential tasks and activities are suspended until the crisis is over.

Unfortunately, we haven’t examined all other healthcare related ‘value streams’ with the same eye towards fast, efficient, waste free work. It’s as if by some invisible elastic band around us, we revert instantly back to the ‘norm’.  But, what if we used the same critical lens to look at all the other processes in place in the system?  Start with identifying who are REALLY the customers and track backwards to see how value is created for them.  Along the way we will find waste of unimaginable proportions. 

Doing this will help us solve the healthcare crisis its root cause, waste and inefficiency.  This is the center point around which healthcare providers’ lean/PI staff SHOULD be revolving.

How Big Is Your Cave?

Posted by:  Ken Pilone

Trust in your people, empower them and let them help you find and eliminate the waste that they see every day!  Unleash their passion and they will rally around you in ways you have yet to imagine!

As our economy continues to circle the drain, panic is beginning to set in.  The President has recently signed into law a bill to boost job growth.  But our confidence in our government is at an all time low.  What little credibility there may have been in our elected leaders has all but vanished in a sea of cynicism and a deep rooted sense of disillusionment and disappointment.  Fear has replaced optimism. 

This bill claims to be able to create 250,000 jobs but our economy has lost 8.4 MILLION jobs since the start of the recession.  The approach congress has taken is to provide meager tax incentives for companies that create jobs that last 1 year or longer.  How meager?  The company would get a 6.2% reduction in payroll Social Security taxes through December of 2010 and a whopping $1,000 credit for employees that lasted a year.  Huh?  In other words, you can save $1,000 if you hire a person for, say, $50,000!  Like I said, meager. We are now forced into a ‘back to basics’ frame-of-mind. 

So what do we do now?  We must attack this problem at its source.  Business has to collectively and deliberately create jobs.  We need to do it for the benefit of our nation.

We need to go back to what I call a ‘caveman mentality’.  When you think about it, why did early humans live in caves in the first place?  Answer: to avoid being eaten.  The cave was a place to shelter from the elements and predators.  But it was more than that.  It was also a place for people to work collectively for the common good.  It was a place where people could find peace and community not just protection. 

Companies are modern day caves.  They provide people with many of the same needs for shelter, a place where basic needs are met and a place for social interaction.  Just as some caves were better than others, some companies are better than others but the basic needs are the same.  What kind of cave do you have?  Do your people feel safe and secure?  Are they?

We know that business, particularly small business is and always will be, the primary economic engine that drives our economy and hence our lifestyle.  We can’t rely on the government to help us.  That much is clear.  Here’s what we need to do.  We have to manufacture jobs! 

But how do we pay for them?  Time for a little basic math.  Businesses have 3 choices; they can add profit to their cost of doing business to establish price (cost + profit = price); they can keep price steady to stay competitive and reduce cost to retain profit (price = profit – cost); or they can do both.  We can achieve more from reducing cost than from increasing profit or raising prices. 

This is how we create jobs.  We mobilize everybody in the company to find and close all the small holes in the enterprise where profit seeps out.  This allows us to keep more of what we make and to create jobs for others who desperately need a cave right now.  Open your cave to more people who will bring more diversity, creativity, innovation and profit!

There is meaning in this for us.  Of course we must be able to make money to stay afloat.  But beyond that, why does your company exist?  Is there any higher purpose beyond trying to please your shareholders and the B.O.D.?  I hope so.  Wouldn’t you rather hire people vs. laying them off? 

This isn’t a trick question.  The fact is that it is your PEOPLE that will determine their own fate if management will only let them.  Turn them loose on the problem; not the solution.  Don’t say to them, ‘sorry folks but we have to lay off 20% of you because of lack of profit’.  Instead bring them the problem to solve.  Say something like, ‘people, we have a great problem to be solved but it can be solved with your help’. 

Take a humility pill.  And as I said above, trust in your people, empower them and let them help you find and eliminate the waste that they see every day!  Show them through your actions that there is a higher purpose.  This will unleash their passion and they will rally around you in ways you have yet to imagine!  Think of the families you will save from the abyss!

Prepare to be amazed.

All the best, Ken

Lean Leadership Summit - Top Notch Speakers & Sessions

Posted by: Jonena Relth, President and Leadership Evangelist TBD Consulting, Inc.

For people involved with or thinking of implementing Lean methodologies in your organization, this is a conference you should consider attending: Lean Leadership Summit 4/21-22 in Irvine, CA.

James P. Womack and Gary Convis will be speaking.

"Lean Leadership Summit
The "Rock Stars of Lean!" An absolutely unprecedented assemblage of many of the most capable and successful executive Lean Leaders on the planet in an intimate setting to share how they transformed their operations to create competitive advantage to grow their businesses."

http://www.advanced-imaging.com/leanleadership/

Hope to see you there! Jonena

How to Stay Afloat

Posted by: Ken Pilone, TBD Consultant and Lean Expert

If you think about it, a ship will sink just as fast from a thousand small holes as it will from one big one.  In fact, it would sink faster.  Why?  Because big holes get noticed.  The captain of the ship will swiftly mobilize every member of the crew when a torpedo hits and yet be completely oblivious to all the tiny leaks occurring throughout the ship all the time.  As long as the ship can pump the water out as fast as it comes in, nobody seems to notice. 

Think of sales as the bilge pump in this analogy.  We tend to think we can overcome our wasteful practices if we could just sell more.  This puts the company under great stress.  Wouldn’t it better to keep what you make in the first place rather than have it leak out all over the place?

The trick is to teach ALL of your staff to ‘see.’  They can be trained to identify waste that you may not be aware of in the first place.  For example, do you create reports that nobody reads?  Do you even know?  Every product, service, task and goal should be challenged to determine what value it provides and, most importantly, to whom.  Who is the ‘customer’ of the report (internal or external)?  What do they do with it?  Is it 100% useful?  What if you omitted section 3?  What improvements do they want?

Here’s an easy but powerful way to attack this.  Have your managers invite their staff to a meeting.  The price of admission is a stack of sticky notes on which each person lists every task, project, etc. they are responsible for, one task per note. The manager draws a window of 4 panes on a whiteboard as below:

RR (Right work done Right)	RW (Right work done Wrong)
WR (Wrong work done Right)	WW (Wrong work done Wrong)

The group then posts their notes on one of panes, pin-the-tail-on-the-donkey style, representing what they think the value to the customer is according to the below:

RR = work customers want and is of high quality

RW = work customers want but needs improvement

WR = work customers don’t want but is of high quality

WW = work customers don’t want and is of low quality

 

Keep in mind that some tasks may overlap two or more panes meaning that it may have some parts that are RR and other parts that may be RW, WR or WW.

 

After each person has put up their notes, stand back and look at your wall.  What do you see?  NOTE:  the top panes represent value-added work.  That is to say that you have determined that there is in fact a customer for those tasks.  Those below are, by definition, non-value added -- meaning the customer either doesn’t exist or doesn’t want that service, product, report, etc.  Pay close attention to the WR box.  This is where pet projects and sacred cows tend to collect.  This is also a great place to start in lowering the waterline to expose waste.

 

For each sticky note, an action should be taken even if it is just to validate that it is indeed work that you should be doing.  One tricky part is work that is regulatory in nature or required by company policy or procedure, e.g., creating budgets or conducting performance appraisals.  The challenge here is to first determine if it is truly needed and, if so, to be as efficient as possible so as to minimize the time you spend on work your customers aren’t willing to pay for.

Employees tend to love this process.  It is a way for them to safely tell you, the manager, what they are doing that may not, at least from their point of view, be necessary.  By listening carefully, you may be able to lighten their load a little while at the same time drawing closer to your customers and building morale and trust.

Try it.  You’ll like it.

How to Save Your Business: Six Sigma? Lean? Both? What’s a Company to Do?

Posted by: Ken Pilone, TBD Consultant and Lean Expert

Six Sigma?  Lean? Both?  What’s a Company to Do?
 
Nowadays, organizations of all stripes are trying to figure out how to maximize their workforce productivity and yet deliver exceptional value to their customers.  Many companies have gone through agonizing layoffs just to stay afloat.  People laid off are devastated; confused; scared and traumatized.  Whole families fall into shock and disarray.  Ironically those NOT laid off also suffer greatly.  They are over-burdened doing the work of those laid off, stressed to the breaking point, frightened, confused, disenchanted and generally demoralized.  Their reward for finishing their plate of spinach is another plate of spinach!  Wow.  Not good.
 
As the economy worsens, those companies are facing an increasingly difficult dilemma; the basic question being framed here is, ‘how do we increase value to our customers while at the same time, manage an increasingly disengaged, fearful and cynical workforce?  As these negative factors take hold and become multipliers, overall morale drops to critical levels and drags productivity down with it. As the impact hits home the poor attitudes of your staff become obvious to customers and the rest as they say, is history.  In aviation there’s a term called a ‘flat spin.'  This is a nightmare, worst case scenario where none of the plane’s controls work.  If this happens the outcome is certain.
 
So, what’s a company to do?
  
Hope can be found via a set of interventions that, in many cases, have literally saved organizations from the brink of certain death.  Here are two approaches that might just save the day along with some high level descriptions of each.
1.  Six Sigma arose from a need to reduce or eliminate defects both in process and products or services.  It has achieved enormous results where quality issues were the primary concern.  It relies heavily on statistical analysis and process controls using highly specialized experts to lead the way.
2.  The term 'Lean' was first introduced to describe the vaunted Toyota Production System in a landmark book, The Machine That Changed the World by Jim Womack.  He described what he observed as a Lean Manufacturing system that later morphed into ‘Lean Thinking’ and is now generically known as just ‘Lean.’
3.  Some companies have developed a hybrid of the two known as ‘lean/six sigma’ to describe their overall improvement strategy deploying a blend of the best of both approaches.  All three have unique qualities and share some overlapping philosophies, techniques and tools. 
 
For example all these approaches:
• Can achieve relatively quick, significant improvements within their specific ‘target areas' 
• Focus on adding value to customers 
• Empower workers to solve problems as low in the company as possible (although differently). 
• Seek to identify and eliminate waste in all its forms
• Use solving real operational problems (vs. hypothetical case studies) to teach workers
• Have the option of bringing in external resources to assist when internal resources are lacking
 
In the case of Six Sigma; the approach is to invest heavily in a select cadre of employees who become experts called ‘Black Belts’.  They function like paramedics.  When the bell rings, they bring their expertise to the place where it is needed, fix what’s wrong and move on to the next place.  Usually they will also conduct beginner level ‘Green Belt’ training as a means of leaving behind ‘trained people’ who have hopefully learned by solving real problems.  Pros: Generally quick results and elimination of quality problems.  Cons:  It relies on a separate ‘class’ of workers who can lose focus on their real jobs and who can risk being distracted by pursuing a sub-career working to increase their status and influence within the Six Sigma ‘belt system’.  Many of those without training will shun it due to its tediousness and complexity.  They react to the rigors of the system the way some of us run from the Amway guy down the hall.  No offense.  I used to be one.
 
Lean approaches this empowerment/productivity dilemma differently.  It seeks to create a ‘culture’ of improvement so that ALL employees are trained to be expert problem solvers.  It seeks to narrow the gap between workers and supervisors so that the line between the two becomes blurry and even indistinguishable.  Traditionally supervisors are expected to be ‘experts’ with experience.  They often come from the ranks themselves.  They solve problems and make decisions.  In a lean culture these become basic skill levels shared by every level. 
 
In advanced lean cultures, the supervisor’s role gradually evolves along a continuum from expert, to boss, to teacher, to teammate, to coach, and ultimately to mentor.  Many decisions are made at the lowest level possible in these organizations.  Even those seemingly ‘sacred’ functions such as hiring, firing, scheduling or purchasing can be made by first line workers who function at a very high level.  This is accomplished through a strong emphasis on training and empowerment which leads to much higher levels of engagement and the unleashing of discretionary effort. 
 
Put simply, Lean helps you draw from your staff not just their hands but also their heads and their hearts.  Pros:  Employees are trained to solve their own or their team’s problems which taps into their creativity, innovation and natural talents triggering high levels of employee satisfaction and productivity.  It also strengthens teamwork and general business acumen dramatically.  Cons: Even though problems can be solved quickly, changing any culture takes time to achieve.  
 
Lean/Six Sigma, when working together as ‘bookends’, this blend gets you an organization that focuses on customer value, eliminates defects/waste and lifts empowerment which lead directly to higher levels of productivity and morale which put you on a journey to a lean culture.  Sounds easy.  It isn’t.  But neither is raising kids.  But hopefully it will lead to some level of satisfaction.  Although with kids, the jury’s still out.
 
Of course this is an oversimplification but hopefully it helps you have a basic framework to discern what would work best for your company. 
 
My recommendation?  It depends.  There are too many variables involved.  But, with a gun to my head, I’d pick Lean because it is a more lasting solution that builds long term capability within the organization while enriching peoples’ lives along the way.  Better yet, take two and call me in the morning.
 
Best always,
Ken

Unleashing the Hidden Potential of Your Staff

Posted by: Ken Pilone

Imagine reading this ad in the Sunday paper classified ads:
Wanted: Passionate people to work tirelessly, without pay or benefits, high risk of injury and/illness, emotionally traumatizing, physically exhausting. 

Ready to sign up?  I didn’t think so.  But what if I told you the ad was looking for volunteers to help the Haitian people survive and re-build?  A lot of people are EAGER to sign up for this!  Why?  What’s the difference?  In a word, meaning.  Do your people find meaning in their work? 

Consider these variations on the same word used in these sentences; my work is demeaning or my job is meaningless.  Would your staff use words like that to describe their jobs? 

Let’s be honest.  We CAN keep our jobs as long as we meet some real or imaginary ‘minimum.’  We often see our staff working at the level at which they feel they ‘have to’ but no more.  By some estimates we could keep our jobs at effort levels of only 50% or even less!  Who’s going to do the work that’s left over?  What choice is there but to hire more people if you’re in this situation.

OK, so why do people hold back so much?  Maybe its because we haven’t figured out how to unleash their real potential.  One way to do that is to help them find the value in their work!  By contrast, volunteers will come out of the woodwork when they see an opportunity to be their ‘higher selves’ by serving others.  This brings out not just satisfaction of doing something they believe is important, but it brings out about real, genuine, unselfish JOY!

Sometimes all it takes is for people to actually meet the customers they serve in order to engage them at a higher level.  Other times, it’s enough that they see what becomes of their work internally.  Maybe having the big boss come sit at their desk or workbench and ask them what their work is like would make a difference.  The bottom line here is that we all have hidden, untapped ‘discretionary effort’ that, given the right conditions, we will willingly, no, EAGERLY contribute. 

Think about this;  what do you suppose your staff says about their jobs, their company or YOU at home at the dinner table?  Would they be willing to ‘volunteer’ for you?  If not, there’s opportunity here.  If ever there was a win/win situation, this is it!

The Simplicity of Lean

Posted by: Ken Pilone
 

Why do people make ‘Lean’, seem so difficult.  It isn’t.  The ‘Holy Grail’ for the success of Lean is found in the PDCA (Plan, Do, Check, Act) cycle first put forth by W. Edwards Deming to help rebuild Japan and its reputation for producing quality products that were ‘export worthy’. PDCA is simply a logical, repeatable, and simple method to continuously improve (‘kaizen’ in Japanese).  Even though there are tons of books out there about it, the fact is, we all practice these principles all day, every day without even realizing it.  It’s what we would otherwise just call, ‘common sense.’

I’ll prove it to you.  What was the very first semi-conscious thought you had when your alarm went off this morning?  Be honest.  Was it, hit the snooze button!  Fast.  And after 2-3 times swatting at the button didn’t you finally conclude you had to get up?  Am I right so far?  As you began to become conscious, you started ‘grasping the situation’ as it’s referred to in Lean vernacular.  This is simply collecting facts relative to the situation at hand. You finally decided to get up based on grasping those facts. You asked yourself questions like;  What time is it?  What’s the weather like?  Where do I have to be today?  How shall I dress?  Do I have to take the kids to school?  What will the traffic be like? And the most important question of all, Is the coffee on?   

From collecting those facts you started to formulate a ‘plan’ based on what we call, ‘deciding needed action’.  Think of all these facts being dumped into a funnel.  What comes out the end, is what will formulate your plan!  That’s it!  All this was probably going on before you even got out of bed!

OK, so once you made your plan, you carried it out, right?  That’s what we call the ‘do’ phase.  Maybe we should call it the ‘DUH!’ phase.  You put together your outfit, got the kids up, made coffee, checked the traffic, etc.  It’s all common sense so far, isn’t it?  But things rarely go according to plan so we adjust throughout.  Sometimes we even say ‘time for Plan B’. This is our way of acknowledging that sometimes things just don’t work out as you planned them.  You have to take a detour if there’s a construction delay, but your destination hasn’t changed.  So even in the ‘do’ phase you have to monitor your results according to your plan.  You’ll need that information later.

When your day is done, don’t you ask yourself ‘what happened today?’ Without calling it so, this is the ‘check’ part of the cycle.  In the ‘check’ phase all you are really doing is collecting OBJECTIVE data. Mr. Spock loves this phase.  Maybe you found a new short cut to work, a cool new restaurant.  Maybe you were late for work.  How did that happen?, you might ask.  If you keep a Blackberry where you check off what you got done and move to the next day what you didn’t, you’re using a PDCA tool!  The key thing here is to think about it as a judge would in court.  Just the facts! 

With me so far?  OK, here’s where it gets interesting.  In the above ‘check’ step you are simply figuring out what exactly happened.  You are comparing actual results to your plan.  But now, in the ‘act’ phase, you want to ask yourself ‘so what?’  You will standardize the positive results and problem-solve the gaps.  Let’s say you went to a meeting and were asked for data you didn’t have, you probably said (hopefully to yourself), ‘Note to self… next time bring data!  Or if it went really, really bad, you might say, ‘Time to dust off my resume’.  By the way, some renditions of PDCA call this the ‘study or adjust’ phase so as not to confuse it with the ‘do’ phase.  I prefer to think of it as the ‘react’ phase.  Think about it.  Why collect data in the first place if you don’t intend to do anything about it?  Why get on the scale every morning, scream bloody murder and swear like a sailor if you’re not dieting, exercising, or doing something to promote weight loss.  Unless you believe in the fat fairy, chances are nothing good happened during the night.  But, if you are watching your calories, etc., then you DO want to see what the results were! 

So if you had a salad for dinner last night instead of your usual mountain of pasta, you’ll want to see what results you may have achieved.  So the ‘act, adjust, study’ step in the cycle is where you LEARN!  PDCA is not a 2-dimensional disc as much as it is a slinky where you spiral up with each cycle. Lots of people and companies do a good job at PDC but a poor job at A.  Many of my clients also have a PD ‘CYA’ system in place but that’s a blog for another day. 

Here’s the big finish.  If PDCA is the Holy Grail, then ‘A’ is the holiest of the holy!  With deliberate, systematic ‘post-mortems’ at the end of your cycle, you’ll know what and how to improve.  The best part is, it allows you to FAIL!  Think about it.  If you have solid learning routines in place, like a net under a trapeze artist, you can take risks and innovate.  If not, you better do it right the first time!

Is any of this mysterious?  Difficult to comprehend?  Complicated?  I hope you say ‘no, this is easy.  I can do this’.  In the end, PDCA is no more than ‘applied common sense’.  TIP:  Consultants can help. Just make sure that they don’t try to make it more complicated than it is.  If it hurts your head, it’s not being done right.  Find somebody else. 

Lean Thinking - Value Streams and Strings of Lights

Please welcome our newest TBD Consultant and Lean Expert, Ken Pilone. 

Ken comes to TBD with 35 years experience in HR, Education, Training and OD in manufacturing, government, retail, automotive, healthcare, distribution, logistics and aerospace industries.  Of those, he spent 19 years with Toyota as a Lean/TPS Consultant. 

Jonena

 

Posted by: Ken Pilone

This past Christmas season, as I stared into our box of outdoor Christmas decorations, I pulled out our Christmas lights which had become a huge, tangled ball, intertwined with other decorations.  Once I untangled the lights from the rest of the stuff, I eventually found a plug.  When I plugged it in, some of the lights came on, others didn’t.  Was this one string? Two?  Three?  It was hard to tell where one string ended and another began.  Eventually, I was able to untangle and separate the strings.  This is exactly what most value streams look like, a tangled ball of interconnected steps that eventually have an end point. 

As I set out to straighten and hang the strings, the metaphor became even more clear to me.  As I stood on tip toes on the top rung of my ladder, it hit me (this isn’t about safety now, is it?).  A value stream is simply a set of activities that, when sequenced together, add value to a customer.  These lights are like that, I thought.  There’s a beginning point, the plug, and an end point where it either terminates or connects to another string. 

The wire is necessary to move current from one light to the next but does it add value? Really?  I mean, nobody will look at my house after I’m done decorating it and say, “Wow, nice wire!”.  We even buy them so that the wire doesn’t stand out.  My house trim is white, so I want to get white wire.  So the goal is to hang them so attention is placed on the lights, not the wire, right?  The wire represents ‘non-value added’ work.  It’s necessary but the customer doesn’t really care about it.  We buy products but aren’t interested in how they got to the store shelves.

My job as a consultant is to help my clients do exactly the same thing.  Our goal together is to untangle their processes, determine which steps in it actually add value for the customer (the lights) and which don’t (the wire).  Then we look at each value-added step and evaluate if it’s working the way we want. Put another way, we ask, ‘if this bulb burns out, does the rest of the string go out too?’.  If not, ‘do we really need it?’.  If so, what do we have to do to fix it? 

What steps in your processes are not working properly?  What is the impact on the customer?  Are your value streams uncluttered and free of knots and tangles?  What do your customers think?

To learn more about Lean thinking and how it's proven methodologies can improve your organization's processes, customer service and bottom line, contact our office.  Our Lean experts are here to help you untangle your Value Streams today! 602-263-1961