“We decided to try and apply some of the manufacturing concepts in the office,” Bob Watson told me back in early 1985 when I interviewed him for a story I was writing for Omark Industries’ annual report to shareholders. Bob was responsible for the general accounting office at Omark’s plant in Guelph, Ontario, Canada.

In Lean manufacturing the next process down the line from you is your customer, so Bob’s team was eager to apply that concept to its payroll and accounts payable processes. The team saw lots of opportunities to improve responsiveness, reduce handling time, and eliminate errors.

However, it didn’t go so well at first. Bob admitted he was going slowly because he didn’t want to stifle people’s ideas. But then his team “got on him” and wanted to learn some of the things he was learning about the Toyota Production System. They wanted the advantage of the concepts and tools so they could effectively approach the opportunities.

The result of the team’s exposure to concepts from Toyota was dramatic as they were quickly able to apply them to make improvements. For example, the team decided to rearrange their desks into a U-shaped layout, tear down the walls of Bob’s office, put together a major cross-training program (so they could become proficient at each other’s jobs), and built in some fail-proof quality techniques in their check writing procedures. They were having fun and making measurable improvements.

Many of the techniques, including the U-shaped department layout, were concepts directly out of manufacturing. The new layout allowed them to immediately talk to each other to solve problems and avoid weeks of wasted time sending notes and files to each other through the company’s interoffice mail system.

While the error rate on payroll and accounts payable checks dropped dramatically, the team was also able to significantly decrease the number of days it took to close the plant’s books each month.

Reduced errors. Less handling time and lost time due to routing. Better visibility and communication. All impressive accomplishments – and the team was only six months into their new way of working.

It was becoming increasingly clear that the Lean principles, ideas, models, concepts, and tools were widely applicable to both manufacturing and administrative environments.

I don’t know when Toyota first began applying their learning’s in the factory to the office, but little is written about this before the 1990s. So I suspect Omark was doing some pioneering work in this realm by 1984 and 1985.

Clearly at Omark, as productivity soared, employee morale skyrocketed. We were rapidly heading to world class in all aspects of operations and everyone knew it.

Next week I will tell the story of why I abandoned Lean’s Japanese terms and created the Now Management System® for American organizations.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | Going Beyond the Factory Floor

Link to Video Blog – http://youtu.be/P3ocrSwZShw

The post U.S. Lean: Going Beyond the Factory Floor appeared first on Mass Ingenuity.

Omark’s Oregon® brand saw chain plant was located in my hometown of Milwaukie, Oregon. On this historic day in 1983, our manufacturing team was very proud to be presenting to a very famous Lean pioneer. Let me tell you why and what happened…

For so many years we, like most U.S. manufacturers, had believed in the “economic order quantity theory.” Basically this theory said that the higher the manufacturing set up costs for a given part the more of it you should produce. After all, the logic was that you had to spread the set up costs across as many parts as possible in order to quickly recoup your investment.

Our most complex part was the cutter on the saw chain. Each cutter part number required very long production runs because it took about eight hours for the tool and die makers to set up the high-speed, multi-stage die into the punch press that made the part. As a result, we would often produce inventory that lasted several weeks or even a month.

Shigeo Shingo, in his book A Study of the Toyota Production System, made it clear that long production runs were fraught with issues. The inventory they produced hid problems and the large batches tied up cash, had to be moved around, and required expensive floor space to store. Besides, a quality problem in one of these huge batches could lead to the entire batch becoming a pile of expensive scrap.

So our team at Omark went to work reducing the set up time of our complex dies based on the Shingo challenge to create “single-minute exchange of dies” (aka SMED). After a year’s worth of work our team had taken the die change process from eight hours to 10 minutes. Wow, was our team proud!

Omark invited Shingo to the plant to share our accomplishment and I was invited to witness his reaction. As the team proudly demonstrated their 10-minute die change Shingo was unimpressed. He proceeded to point out all the waste that remained in the process much to the chagrin of everyone watching. He was a tough taskmaster and did not stand on ceremony.

While no one was happy, we were clear that Shingo was right. So we recommitted ourselves and within another year of hard and creative work, the experts got the die change down to under one minute. Eight hours to one minute!

This was an amazing accomplishment. It was a great lesson that we were on a journey and had much to learn.

Omark, fortunately, had a culture that made it clear we had no interest in being above average–we wanted to be the best. It was all about being relentless; it was all about never stopping to rest on our laurels.

Did it pay off? Absolutely. Omark gained a reputation of being the best manufacturing company in the U.S. – a perspective eventually shared with others by the likes of Shingo himself.

Next week I will share more results from our early Lean projects.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | Shingo Visits Oregon

Link to Video Blog – http://youtu.be/chQBWzc56Oc

The post Shingo Visits Oregon – And Sets a New High-Water Mark appeared first on Mass Ingenuity.

It was clear that employees in Japan were engaged. Toyota was famous for andon, a manufacturing term used to describe a system whereby employees could “pull the cord” and alert management and engineering that there was a quality problem. Pulling the cord resulted in the production line coming to a stop and causing all resources to be focused on resolving the problem all the way back to its root cause.

YouTube: Why Buy a Toyota – Andon Cord

In the U.S. we used inventory to hide these kinds of problems. If there was a problem with a part we had an extra batch of parts around and would set the bad one aside for the quality department to analyze. But in Japan a quality problem caused immediate focus on problem solving and a drive to eliminate all quality problems at their source. It was a philosophy of “build quality in” versus an “inspect bad quality out” approach.

For Omark this was a different level of employee authority and involvement.

We also learned of their Quality Circles, groups of volunteers, usually working with their supervisor, who would work to improve some aspect of their work. The term “quality circle” came from the Plan-Do-Check-Act cycle (PDCA) credited to Dr. W. Edwards Deming (and to the earlier work of Walter Shewart) which provided the structure for Japan’s problem solving and process improvement efforts. Lockheed started using them in the U.S. as early as 1972.

Within the first year at Omark we had 16 quality circles going and they worked on a wide range of process improvements and we saw early success. However, I believe we, like many others, failed to recognize that these quality teams represented such a different way of doing things that until other cultural aspects changed, they would have nominal success. For so long, Omark, like many other organizations, believed management’s and engineering’s job was to improve things, hence Quality Circles were unnatural and that doomed them for most companies.

I believe we also misunderstood what “volunteered” meant. In Japan everyone on a team “volunteered.” Making improvements in a Lean world is not optional; it is everyone’s job. You might volunteer on what part you play in solving problems, but applying your knowledge to make things better is what everyone in Japan does.

For me personally, employee engagement has always been my passion, because I believe in the gifts, talents and passions of people. From these early years I learned that employee engagement is not a “tack on” to the way we do things. Employee engagement demands a philosophy and a system of management that sees it as the core means of organizational improvement and thus, organizational success.

In the end Lean is centered on two organizing principles: one, customers define value, and, two, employees create it. Note, it does not say management creates value.

The only way to be successful in this highly competitive age is to put every head, heart, and soul in your enterprise to work creating the future. As Peter Drucker, the management guru said, “The best way to predict the future is to create it.”

Next week I will share the first visit of Shigeo Shingo, one of the most influential architects of modern day Lean, to Omark Industries and the lessons we learned.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | Quality Circles: False Start to Lean

Link to Video Blog – http://youtu.be/9mMKZzqVCQQ

The post Quality Circles: The U.S. False Start to Lean appeared first on Mass Ingenuity.

By 1984 Omark was gaining wide recognition as one of the best companies in America. The company was featured in what I believe was the first book written in the U.S. on the application of Lean methods brought back from Japan. Dr. Richard Schonberger’s 1982 book, Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity.

We appeared in many articles and delivered results that were hard to beat. In 1984 we reported an increase in sales of 18 percent over 1983 (from $252 to $297 million) and our net earnings were up a whopping 115 percent (from $6.8 to $14.6 million. Things were going well.

As our reputation soared we received many calls from executives from around the country who wanted to come and learn about what Omark was doing. I was asked to run Omark’s Visitors Days, a quarterly two-day event we hosted for executives interested in learning how we were applying all we had learned. Before long, we had a year-long waiting list for visitors.

While we were being successful, our learning didn’t stop. Along with one of my Omark colleagues, I had the pleasure of attending a two-day session in 1984 presented by Dr. W. Edwards Deming himself. There I learned of Deming’s 14 points and I began to comprehend how he had been the spark behind Toyota and Japan as a whole.

Later, in 2005, Dr. Shoichiro Toyoda, then Chairman and former President (1982-1999) of Toyota, said:

“…Dr. Deming came to Japan following World War II in order to teach industry leaders methods of statistical quality control, as well as to impart the significance of quality control in management and his overall management philosophy… Dr. Deming soon became widely known not only as a brilliant theorist, but also as a kind and modest man. In 1951, the Deming Prize was founded in order to promote the widespread practice of quality control based on Dr. Deming’s philosophy.

We at Toyota Motor Corporation introduced TQC [Total Quality Control, later known as Total Quality Management] in 1961, and in 1965 were awarded the Deming Application Prize…. As we continued to implement Dr. Deming’s teachings, we were able to both raise the level of quality of our products as well as enhance our operations on the corporate level.”

Getting to the roots, the origin of what would grow in popularity and become known as Lean, was essential to filling out my own understanding. It was not Toyota who invented Lean although through its commitment and conspicuous success Toyota popularized a set of principles they learned from a man raised on a chicken farm in Polk City, Iowa, Dr. W. Edwards Deming.

For all of us at Omark we realized there was so much to learn, we realized that being the best in the world was a lifetime journey, not a destination.

For me, the journey had only just begun.

Next week I will share the lessons we learned about Quality Circles, and why they failed in the U.S.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | Lean Blossoms: Spreading the Knowledge

Link to Video Blog – http://youtu.be/yyaQZtHQdIQ

The post Lean Blossoms: The U.S. Pioneer of Lean Spreads the Knowledge appeared first on Mass Ingenuity.

To get the Omark revolution underway, in early 1982 we bought the first 500 copies of Shigeo Shingo’s A Study of the Toyota Production System that were imported into the U.S. Because it was the first edition it was poorly translated from Japanese into English. However, we had no choice but to form book study teams to see if we could understand what Shingo meant.

By the way, the second edition, published in 1989, is a far better translation. If you check it out on Amazon you will find the following description of the book:

“This is the ‘green book’ that started it all — the first book in English on JIT, written from the engineer’s viewpoint. When Omark Industries bought 500 copies and studied it companywide, Omark became the American pioneer in JIT.”

Little did we know that our Omark study teams would turn into a powerful tool. The “Janglish” language forced us to create our own language for the ideas contained in the book. Much of the resistance to Lean, in my experience, is not to the ideas themselves, but stems from the use of unfamiliar Japanese terms. I long ago abandoned the Japanese and created my own terms so it was easily accessible to Americans.

Study teams not only created Omark’s language about the ideas in the book, but process facilitated the opportunity for each and every individual involved to develop their own meaning of the concepts in the book. And, as we created our own meaning and ownership of the concepts, we also fortuitously developed the case for change that would destroy any and all resistance to implementation.

In the early years Omark sent many more people on Japanese study tours simply because seeing the practices and belief systems firsthand made a huge difference in comprehension, acceptance, and inspiration.

Our Lean lessons in these early days were profound, and many of them were unconscious – only fully recognizable in retrospect. What we learned is that study tours enabled people to see for themselves the future. And book study teams allow people to create their own meaning from ideas, imagine how to apply these ideas, and build their own case for change.

In the world of management practices, there is no way to take ownership for something you don’t understand.

Next week I will share some personal stories of the influences of Dr. W. Edwards Deming, the man who most shaped Japan’s business success, a success that by 1980 had been 30 years in the making.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | The U.S. Pioneer of Lean Spreads the Knowledge

Link to Video Blog – http://youtu.be/Ger5pCz9Yq4

The post Lean Germinates: The U.S. Pioneer of Lean Spreads the Knowledge appeared first on Mass Ingenuity.

(This is the second in a 12-part Series on the Origins of Lean in the U.S.)

“Go find the best management practices in the world!” That was the challenge that Omark Industries’ president gave the task force I was assigned to in late 1981. It was a broad and exciting charter, one that would significantly alter my career path.

Some of the team members went to Japan, while others traveled the U.S. in search of best practices, which if implemented would ensure Omark was functioning at a world-class level. We travelled in teams to gather data, insights, ideas and tools.

For me one of the most memorable tours was going to Marysville, Ohio to the Honda Gold Wing manufacturing plant where we saw many Lean principles in action. Their production line was simple and clean with little inventory around. We studied several dozen companies such as Lincoln Electric, read a bunch of books, and compiled our learnings. Then we met back in Portland to pore through what we had learned.

Early on in our six-month study project it became obvious that there was no single silver bullet. The best companies in the world all had put together their own unique set of management best practices – from breath-taking automation to self-directed teams to pay-for-knowledge systems to quality circles. Of course in the midst of it all the Toyota Just-in-Time (JIT) Production System stood out.

At the same time, we felt early on that Toyota had not yet completely figured out all the pieces. After all, its famous principles known as The Toyota Way weren’t published until 2001.

In addition to JIT, we became very interested in the Total Quality Control (TQC) concepts of Dr. Joseph Juran and in Quality Circles. And we also began to study the work of Dr. W. Edwards Deming.

Finally, it was time to architect the approach we would take at Omark. It would include Toyota’s Just-in-Time Production System, which we called our Zero Inventory Production System, or ZIPS. The purpose of ZIPS was to drive out the waste and process breakdowns in our manufacturing operations through the systematic reduction of inventory. We set a goal of reducing the company’s inventories by 50 percent in three years, because the $65 million we then had tied up in inventory could better be used to grow the company. It was a huge target.

Prior to his 1982 book, Out of the Crisis, Dr. Deming’s work had been difficult to access and use to teach others as he had written few articles and lectures were challenging to get people to. That’s what led us to use Dr. Joseph Juran’s Total Quality Control work; Juran had produced a video series, which made training others much easier. Juran had also sparked a strong following in Japan, which we respected, as a result of lectures he had done there in 1954.

To achieve this ambitious goal, we recognized that our commitment to Quality Circles meant that we needed to be better at formally engaging our people to solve problems associated with their work. By the end of 1982 Omark had 16 active Quality Circles.

We rolled out the ideas and tools to the company and began a management revolution. By 1983 Omark landed on the cover of Inc. Magazine (along with Hewlett-Packard) as one of the two leading implementers of Just-in-Time in the U.S.

Omark’s Lean revolution began spreading through the U.S., a country in need of an answer to the Japanese economic threat.

What we learned in our study visits changed everyone’s view of the world of management because it turned many conventions upside down. And the results to come proved our intuitions were right on.

Next week I will share the story of Omark’s purchase of 500 copies of the original Shigeo Shingo book on the Toyota Production System and how the book was used to build understanding and create a case for change.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | The Seed of Change is Planted

Link to Video Blog – http://youtu.be/7CaIkgsbwTU

The post Lean’s U.S. Origins: The Seed of Change is Planted appeared first on Mass Ingenuity.

Those who have read my book, Business at the Speed of Now, and who work with the great team at Mass Ingenuity, rarely hear us talk about Lean. Even though the principles we believe in and the tools we work with are totally Lean, I stopped talking about Lean many years ago for two reasons: 1. I, along with many others, found the Japanese terms to be a turnoff and so I created an American version of it. 2. Lean has become so misunderstood and so misapplied over the years I did not want us to be associated with its malpractice. That said, we believe in Lean, and the Now Management System® is the application of Lean to the work of management, work that leads to creating a successful Lean enterprise.

During the 1970s the U.S. lost 23 percent of its global market share, according to a study conducted by the U.S. Dept. of Commerce published in the early 1980s. And much of it went to the Japanese. In that decade Japan was especially successful by gaining monumental ground in the automotive and consumer electronics markets.

Dr. W. Edwards Deming

In 1980 NBC produced a television whitepaper titled If Japan Can, Why Can’t We? The show traced Japan’s success back to one man, Dr. W. Edwards Deming, an American. Deming was sent to Japan after World Way II by General Douglas MacArthur to help the country with their first post-war census. It turned out that Dr. Deming was far more than a statistician. Deming was a clear thinking and blunt advocate for a radical shift in management practices.

WHAT ARE THEY DOING?

Jack Warne wasn’t easily impressed. The president of Oregon-based Omark Industries was an old-line manufacturing guy who looked to machines as the primary resource to improve productivity. In 1981 Omark (now known as Blount International) had 22 manufacturing plants around the world and 4,100 employees. And, Omark was in its own right, a darling of Wall Street and very well regarded.

But Jack’s view of the world of management changed in early 1981 as a result of one of the first American business study missions to Japan.

Omark was known for being people oriented, but prior to the Japan trip Jack believed that the company was doing all it could to engage its people. In an interview I conducted with Jack for the 1980 Omark Annual Report to Employees (I was the company’s internal communications manager), I asked Jack what was the single most important thing the company could do to improve productivity. His astonishing reply was, “Buy more productive capital equipment.”

Needless to say it wasn’t the answer I was wanting for the employee annual report.

However, Jack’s worldview changed during our study mission to Japan and it changed remarkably.

On the first day or two of the tour Jack hung in the back of the tour group not expecting much. But by the third day he found himself in the front of the tour group at Nippon Denso, the global automotive components manufacturer, and he was intrigued by what he was seeing.

There was indeed something different going on in Japan. Jack began realizing that his Japanese peers were running their manufacturing businesses in ways he had never seen.

Upon his return to the U.S., Jack launched what he called the Japanese Management System Study in the fall of 1981 at Omark. He asked me to be a member of the seven-person team with the responsibility for communicating what we were learning to the rest of the company. The assignment was an honor that significantly altered my career path.

Jack knew there was something extraordinary going on in Japan and he was wise enough to know that their Lean methodology needed to be thoroughly studied — and he also knew he would need a guiding coalition to launch a change of this magnitude.

But not even Jack realized that what he saw would inspire a revolution in manufacturing in the U.S. – and eventually give birth to the Lean movement in America.

Next week I will share what our study team learned and the three-pronged approach that transformed Omark Industries.

Please share this series with people you know who have an interest in Lean.

Video Blog – Lean Management | Tour That Inspired The Lean Movement

Link to Video Blog - http://youtu.be/6EG93c2jdUM

The post The Tour That Inspired the Lean Movement in the United States appeared first on Mass Ingenuity.

Culture change has long been the stuff of hocus pocus and black magic. Many people talk about it, but it seems difficult to find real success stories because the levers of success are less than obvious.

What is known is that a direct assault on culture doesn’t work; you don’t alter behavior by publishing new values and running workshops on the new expected behaviors. It’s been tried and it never works.

Culture is not the result of new talk. Cultural change is the result of new actions, routines, roles, and expectations for specific and defined actions. The structures and processes of an organization’s management system is what shapes these factors more than anything else, and so when the management system is changed, the culture changes. This assumes the leaders of the organization are serious about the changes they are making, and work hard to be models of the new ways.

Here are 10 things to remember as you think about organizational culture, its role, how it is shaped, and how it can be changed:

1. Culture is the great lever of organizational change
2. Culture determines if a given change will be accepted or rejected
3. Today’s economic world demands organizations move quickly
4. The speed of an organization is governed by the speed of decision making
5. Your management system defines your decision making strategy and quality
6. A culture that moves decisions to where the knowledge is greatest, which is the front line, will make the fastest and best decisions
7. To set people up for success in their decision making, management has a lot of work to do in advance
8. Leaders have to accept that change is now the constant, and the only way to keep people is to let go of centralized control
9. Culture change is much more readily accepted when people gain control not lose it
10. More than any other thing, changing the management system causes the biggest shift in organizational culture

One of the biggest surprises for me in learning about organization development has been understanding the relationship between the complex nature of human beings, and the work they do. What I have learned is that mechanical things such a strong, healthy, and structured business reviews can have profound impact on cultural components such as human beliefs, behaviors, and trust.

The better we understand the interplay between structured management processes and human behavior, the more control we have in shaping culture.

Culture does not have to be the accident accumulation of unspoken norms and behaviors. It can and should be intentional.

Thanks for joining me in this series on culture.

Video Blog – Now Management System | 10 Keys

Link to Video Blog - http://youtu.be/vo_QqJ5G9xs

The post The 10 keys to taking the mystery out of culture change appeared first on Mass Ingenuity.

As you likely know, the concept of “management as a system” is not commonly talked about even among experienced leaders and academics. However, if you understand that a process is a collection of activities that target a specific output, and that a system is a collection of processes that target a larger aggregated output, then buying the concept of a management system isn’t much of a leap.

Why does this matter? When we understand that management itself is in fact a collection of specific processes, it allows us to apply process thinking and tools to the work of management. So, like any other process, the management process can be understood, assessed, measured, and improved.

It took a long time for me to understand the connection between an organization’s management system and its culture. In fact, I learn something new about that relationship almost every day as I interact with customers and they discover things I had not seen.

What is clear is that as an organization moves from an informal management system to an intentional and effective one, such as the Now Management System®, the leaders start to actually gain control over their results. This happens because process improvement is all about transparency (seeing where things are breaking down), accountability (measuring results and making it clear who has the responsibility to fix problems), problem solving (ensuring that process owners know how to fix processes), and the elimination of fear (which creates the safety to risk taking action on the problems).

While the Now Management System systematically creates clarity, it shifts culture by establishing clear norms of accountability, new routines for transparency, and standard disciplines for solving problems. Our system achieves its maximum return on investment by shifting culture at the heart of these dimensions.

Culture is all about patterns, roles, routines, language, and expected behaviors. A good management system addresses every one of those dimensions of organizational functioning. As an example, one of our clients recently held their Quarterly Target Review and reported improvement in 46% of their processes measures quarter over quarter. This organization has dramatically shifted its culture to one of transparency, accountability, problem solving, and shared success.

All in all, I have never seen anything change culture as effectively and as positively as changing an organization’s management system.

Next week, the final post on this 10-part series on organizational culture.

Video Blog – Now Management System | Changing Culture

Link to Video Blog - http://youtu.be/NXM6Fz5KuUo

The post How changing your management system changes your culture appeared first on Mass Ingenuity.

Change, in its simplest meaning, is a response to an opportunity. And one thing for sure is we have lots of opportunity to respond to in our world – because it thrives on change.

When we hear the word change we often think of it as an event: we change from this to that. We change clothes. We change jobs. We change doctors. We change homes. Change is often seen as black and white.

Organizational change is often seen the same way. We have a culture of this and we instead want it to be that. For example, we have a long history of top-down management, and we want to move to decentralized decision-making and a high engagement culture such as the Now Management System creates.

When I think about organizational change, my mind goes back to a concept popularized in Peter Senge’s The Fifth Discipline: The Art and Practice of the Learning Organization, published way back in 1990. According to Senge, rather than take an organization through a periodic overhaul, what really makes sense is to create a highly agile organization. What this means is that the DNA of a highly agile organization allows it to constantly reinvent itself.

In other words, learning organizations don’t see change as periodic they see it as continuous and as a way of life. Learning organizations thrive on improving everything and they love it when they have to achieve a breakthrough to transform its performance or add a new capability.

Learning organizations embrace change better if they have a system of management that enables it. Then change is not talk, it is built into everything they do. You can see the markers of such organizations because of their clear commitment and focus on learning how to improve. They learn how to define breakthroughs and they have a track record of doing the work it takes to deliver on their opportunities. These organizations measure what matters most and work to improve those measures.

Learning organizations have a stimulus/response way of seeing the world. Something shifts, so we shift too. Applying these best practices to managing our organizations is a stimulus/response approach to learning. Something shifts and we recognize the need to shift; because we are agile, we shift with it.

As leaders, if we want to create an organization that actively supports change, we have to create one that is designed for change. Organizations that thrive on learning are the ones that best embrace change.

Next week I’ll share some thinking on how changing your management system will change your culture.

Video Blog – Process Improvement | Supporting Change

Video Blog Link – http://youtu.be/yCDr5fBw4Uc

The post What does it take to create a culture that actively supports change? appeared first on Mass Ingenuity.