by The HLH Team
Let’s make this personal. Where is the most amazing place you’ve ever been, a place that took your breath away? Was it a glacier clad mountaintop, a steamy jungle or remote cliff overlooking endless ocean? Take a second and capture the image, feeling, and memory in your head.
Now: write me an email describing that place. Don’t make it too long because I’m a busy man. In a few sentences, make me breathless. Tough to do isn’t it? Now let’s replace “place” with “vision.” We all have visions for our businesses, places we want to be in a year or 5. It’s probably as clear as day in your head, and I’ll bet it’s spectacular. You’ve probably tried telling your staff about your vision. After all, if they are on board it has a lot better chance of happening. But your staff haven’t been getting on board. They just haven’t been getting it. And without sharing the vision, how can you properly manage change in order to get there?
Stop Telling, Start Demonstrating
The solution? Stop trying to show them the picture. You can’t explain your most amazing place to me, so how can you explain your vision to them? You need to show them how the vision can happen, and how the change is going to benefit everybody.
The managers and owners who manage effective change are those who leave their office, stop sending emails and start showing their staff what change looks like. They start finding and eliminating waste, thinking of more efficient ways to perform their daily processes, and empower those around them to contribute. They’re in the trenches, on the factory floor and in the hallways coaching people, asking them about their ideas, and thinking about how to make things 1% better than they are now.
But How?
Effective change management is not about edicts and it doesn’t happen in a day or a week. It is about harnessing the power of your team to collectively push the company to its higher potential. Engrained mindsets have to topple and decades old ways of doing things have to change, and none of it can be forced or coerced.
Think of the receptionist who has always double entered her invoices to make sure they’re accurate. She’s been doing this since her kids were toddlers (they have their own kids now). She’s the ‘old-guard’, and her role in your vision is like a swing-state in a US election; you need to change her mind if you want your vision to succeed.
You can’t change the receptionist’s mind by telling her about your vision. Engage her at her desk (not sitting across from yours with you staring down at her). Talk to her about processes and how they could always be simplified. Ask her about her about the processes she uses and empower her to give you her ideas. Listen to her ideas and implement those that you can. Take the baby steps with her but she needs to cross the line towards change on her own.
That’s how to stop showing and start demonstrating.
Be Consistent
If you don’t think that you have the time, energy and perseverance to see the change through, don’t start. Starting and failing, especially when it leaves others in the lurch, engrains current culture and makes it harder to change the next time. When you step up to manage change, you’re making yourself the most visible person in the office. You’re the only one who can make change happen, and the only one who can let it fail.
All eyes will be on you, and while this puts a lot of pressure on you, if you’re a consistent demonstrator of the change you want to bring about, you will be the one to take the next step into the future of your company.
Stay Tuned…
Over the next few months, we’ll be giving you tools, tips and inspiration for how to implement change management and what to expect along the way. We’re going to be giving practical advice, often based on our own successes and failures, as we’ve managed change from a lean perspective, improving processes and making our company more efficient as we go.
by The HLH Team
Establishing a company culture of Lean is about empowering the people behind your processes: the staff.
Fostering collaboration and teamwork can be the secret ingredient to better margins. Daily team meetings are a great way to start that journey.
Need more than good intentions:
Your first tip for implementing consistent and effective team meetings is: keep this article. Why?
Because here are the 5 steps of what happens to most companies that put team meetings in place:
1) Initial enthusiasm about how awesome this new meeting format will be! The excitement is infectious and everyone is on-board.
2) You establish a reliable schedule and things flow nicely for a while. It’s working!
3) The meetings become routine and enthusiasm wanes. Topic drift happens. You learn more about your HR manager’s car trouble than wasted resources in your company.
4) The meetings lose their sense of purpose. All you can think about is how much they’re costing you in lost work time, and you throw up your arms and disband them.
5) You hear about an amazing new format for team meetings! See #1 and repeat.
So keep this article. Pin it to your bulletin board and read it during #2 and #3 to get back on track. Setting up a consistent flow for team meetings takes time.
It won’t happen in a week, but keep true to your goal and agenda and it will happen.
Elements of an Awesome Team Meeting
The best time is first thing in the morning. Give people 15-30 minutes to shake off the sleep, check emails, and get past commuters’ road rage.
Stand up. When we sit down it’s like someone flips us into a lower gear. Our energy changes and nursing our coffee mug becomes a matter of life and death.
Standing embodies energy and readiness.
A lot of companies follow Pavlov’s example and use an audio cue to start meetings. Playing the same upbeat song, at the same time, will remind people office-wide to join the circle. Make it early enough in the morning that people won’t be on client calls yet or in meetings.
If you have a Kanban board (the multi-coloured sticky note whiteboard), make it your focal point.
Kanbans make processes transparent and create accountability; that’s what lean meetings are all about!
No phones. Period.
Beware of topic drift! Make everyone understand that this is not the forum for Saturday night recaps or sick cat laments. Be a strict enforcer of people staying on topic.
You’ll feel like a schmuck at first but people will get the point quick. Everyone will thank you for this in the end.
Make sure someone takes minutes. The duty can rotate but it’s essential.
Documented accountability always trumps the “I think I remember that being assigned to me, maybe… sort of.”
Above all: make it fun. Start with a joke and keep the atmosphere lively, enthusiastic, and collaborative.
It’s a crisp start to the day that reinforces a sense of team, opens communication, and makes people feel listened to and empowered.
Is it Effective?
If you stick to the agenda and engage staff, you’ll have effective meetings.
Knowing if they’re engaged or not, unless you’re lucky enough for your staff to be painfully honest, is about body language.
Are they looking the Team leader in the eye? How bout each other’s eyes? Are they standing farther from each other?
Is their gaze glazed over as they think about coffee or what their phone is doing?
If you’re the boss, set the example by making it a priority. Don’t wander in late or skip it because you’re working on a project. Be a part of the team by being within the group; don’t reinforce old and unprofitable hierarchies by looming above it. See my last post on Lean Leadership for more on this topic.
The true test of its effectiveness will be the office culture. Within a few weeks you should notice increasing collaboration, employee feedback to management, and productivity overall. Be resolute in the meetings and you’re a solid step closer to making Process Improvement a systemic part of your company culture.
by The HLH Team
The word “leadership” gets thrown around a lot in business writing. Countless articles and books preach “first out of the trench”, but few of them give leadership the seriousness it deserves.
Lean understands that a company’s leadership is either its driving force or the wall it runs into. A good leader sparks self motivation in employees and makes them want to do better. The principles of lean leadership are both elegantly simple and counterintuitive to corporate culture.
In my last post I examined why lean initiatives often fail. Spoiler alert: it was leadership. Let’s find out what kinds of leaders make process improvement initiatives prosper.
This isn’t your standard blog post. Below are 3 comparisons of Lean vs Traditional leadership traits. I’ve included questions so you can think about what kind of leadership is in your company. Whether you’re the leaders or not, be honest in your answers. Process improvement begins with transparency.
What’s the leader’s Philosophy?
Dreams of short term revenue growth dance in traditional leaders’ heads. They ask “who” will do this and “who” will do that, all to push more product out the door.
Lean leaders have a longer term approach, and care about margins more than revenues. Putting customers first, lean leaders build processes that react to customers’ pull. “Why” becomes a tool that streamlines processes over time and exposes waste.
Question #1: What is your leadership philosophy and, more important, do you practice it?
Question #2: In your opinion, should business prioritize revenues or margins, and why?
What’s the leader’s Approach:
Most business models silo companies into departments, each with their own processes. Employees have little or no power to stop the processes: that power is in the corner-office.
Traditional leaders use spreadsheets to track their teams’ KPIs, ROIs, COGs and mistakes. When something goes wrong, they don’t find out until the news, via various data entries, hits their inbox. Reacting to what has already happened defines traditional leadership style.
Lean leaders empower employees to provide actionable input on wasteful processes. Instead of looking at last week’s spreadsheet, these leaders are present for today’s processes. They’re on the shop floor and at the morning meetings. They break down departmental silos so that the company becomes a unified, transparent system. They catch mistakes either as they happen or even before.
Question #3: What is an example of an employee providing feedback in your company? Was it acted upon and what was the result?
How does the leader deal with People:
Traditional leaders slot employees into functions. They create systems that sacrifice creativity for efficiency. Expensive consultants get hired for feedback but staff aren’t empowered to speak their minds. Traditional leaders set goals and provides feedback based on goal performance. No matter how many management seminars they attend, they are the boss and the sole problem solver.
Lean leaders are coaches. They put processes before goals, and dialogue with staff about continual process improvement. These leaders empower their staff, and staff respond by finding problems in processes before they erode profits.
Lean leaders make people want to excel by giving them the chance to improve the processes around them. Our employees want to make our businesses successful: we just need to give them the chance.
Question #4: What is one process in your company that no one has examined in a while? Every company has them.
by The HLH Team
This Can Happen to You…
Imagine this. Executives in your company hear about lean, read up on it, and become enamoured in the potential cost savings. Managers start talking and words like “kaizen” and “muda” start floating around the break room. Several meetings happen where an external consultant discusses processes and continual improvement. Whiteboards with coloured sticky notes pop up around the office.
For a few months it goes extremely well. The executives start invigorating morning meetings that get everyone thinking about finding waste. Inventory levels shrink, the hammers in the shop are outlined with bright tape to indicate their spot, and everyone moves their respective sticky notes across the Kanban board as they finish tasks. Productivity rises, and so do profits.
After a few months, the executives delegate the morning meetings to a senior manager and stop coming to them. They’ve become interested in other new projects and aren’t as visible as they used to be. The increased productivity and profits stop being a novelty; they become assumed. The expensive consultants stop coming. People aren’t as conscientious about moving their sticky notes across the whiteboard. Inventory levels creep up as people think less about processes. Waste cuts back into profits.
Lean is not a Fad
The scenario above has played out in countless businesses. It happens when leadership hears about lean but don’t appreciate the deep, company-wide paradigm shifts necessary for long-lasting process improvement. If leadership focuses on a top-down approach of implementing the tools of lean (kaizen, 5S, etc), the created systems will fall apart as soon as lean stops being new and novel and leadership loses interest.
It’s the wrong approach to think that lean is an assemblage of tools to make you more money. Implementing lean tools without a company-wide inclusive culture of lean will result in short term productivity successes and long term frustration when leadership, inevitably, takes their feet off the gas pedal.
Lean is about people as much as processes. As process improvement breaks down barriers across departments, it must also break down barriers of hierarchy, social exclusion, and lack of respect. In a lean culture, leadership commits to making the shift from Supervisor to Coach, and works alongside managers to create a sense of empowerment and accountability. The entire organization must make serving the customer better their prime focus. If leadership imposes lean with the sole goal of increasing profits, it won’t succeed in the long term.
In the next few posts, I’ll drill down into what elements create a culture of lean. Next week I’ll start at the top, with looking at “lean leadership.”
by The HLH Team
You’re getting your financial statements today. You pour yourself an extra large coffee and amble into the office, wondering how long this will take. The accountant walks you through the line items. As he does, you get the same nagging thought that you wished you know more about what’s behind these numbers. The nagging goes away; after all, these statements are about things that happened months ago. You sign them approved, eager to stop looking at history you already know and get on with managing your business.
Does this sound familiar? It’s shocking how many executives know almost nothing about what really goes into their financials. Statements have evolved to be so complex that it makes the accountants wielding them look like magicians (which is probably why they’re so complex in the first place) and the executives feel like toddlers asking silly questions.
Let’s stop this. The people who run their businesses should know how their dollars are being used as it’s happening (not 2 months after when nothing can be done about it). The accountant’s job should be to empower clients, not baffle them. If the first paragraph reminded you of your accountant meetings, you’re in good company with most executives out there.
We’re going to turn your financial statements on their heads so that you feel empowered to take action when you read them. Let’s find out how…
Lean vs. Traditional Accounting
The first thing to know about your traditional accounting statements is that they aren’t neutral: what they show and what they conceal actively affects the way you think about your business’s financial performance.
Lean is about creating a customer-driven production model, improving processes over time, and generating actionable data. Traditional statements don’t just not show you these things, they will work against you trying to implement lean. They are, to quote lean accounting guru Brian Maskell, “anti-lean.” Here’s how:
1) Traditional statements class inventory on hand as an asset, even if you have no customers. You pay for the labour, the materials, and the overhead to build your widget, and at the moment when you have spent the most money, it becomes an asset, even as it collects dust in the back warehouse.
By this logic, the more inventory we have (even if none of it has sold) the better profit we’re going to show. Lean recognizes that high inventory levels are one of wastes’ favourite hiding places. Excess inventory can be a business killer, and it’s lean’s constant nemesis.
2) Traditional statements measure outcomes and not processes. Focusing on outcomes denies the opportunity to eliminate waste from processes. It also encourages us to increase our outcomes (which are usually assets), even if the process is direly wasteful.
3) By the time your financial statements come along, it’s too late to do anything with them. They’re historical, static documents. Even if they were still actionable when they come out, they’ve evolved to be so complex that they overwhelm more than they empower.
What is Lean Accounting?
Lean accounting motivates lean action. It drives continuous improvement by measuring processes over outcomes and it presents numbers in simple, clear formats so they drive you to do better.
Lean manufacturing pivots production from the company “pushing” the process to the customer “pulling” it. The accounting side of lean operates the same way. It reverses your financials from being about your company to being about the customer (who is, after all, the reason your company exists).
A lean accountant will wade into your traditional statements and reorganize costs into “value-added” and “non value-added.” Value-added is every cost that the custom is willing to pay for (raw materials, necessary labour, etc). Non value-added expenses are costs that customers aren’t willing to pay for. The can include expense accounts, excessive travel (consider online conferencing, instead), and legal fees among many, many others.
Why it’s Essential
Whether you’re retail, service, manufacturing, or government, it’s going to be very difficult to implement lean in your business without switching to lean accounting. Your traditional statements will discourage any progress you’re making. It will be like trying to quit smoking while in a house full of smokers.
Lean accounting not only creates a system that makes waste visible, it acts as a motivator for all other processes. Once a lean accounting system is set up, it acts as a neon sign of what is wasteful and a reminder/ motivator for management to commit consistently to lean.
Lean accounting statements are like business coaches in your ear, challenging you to act on the waste that has been made visible in front of you. The accounting meetings I described in the first paragraph will be replaced with meetings that you walk out of motivated and excited about the changes you’re making and will continue to make.
by The HLH Team
Origins
Reading this article is a process, as was when you woke up this morning, brushed your teeth, and commuted to work. Everything we do, from changing diapers to climbing mountains, is a process. Lean philosophy teaches us that all processes involve a certain amount of wasted resources, and that there are actionable ways to reduce that waste to make the processes more efficient.
Lean was developed by Toyota to eliminate “muda”, or non value-added work, on their assembly line but the term wasn’t coined until 1988. The “Toyota way” was about improving the flow/ smoothness of work and eliminating “mura” (unevenness) in the system.
It’s a common myth that, because lean’s origins was with Toyota, it’s a strictly a “manufacturing thing.” The beauty of lean is its elegantly simple methodology, which can be applied to any company or system that uses processes. In its eyes all processes, from the movement of materials to the development of information to the delivery of services, operate essentially the same.
While a manufacturer will use lean to make widgets faster, with fewer defects, and to be about producing to meet customer demand instead of to creating inventory for its own sake, an office manager could use it to streamline file handling or a retail owner to tighten up merchandise planning.
Lean has applications in everything from software development to start ups to the service industry. One of the most important applications, lean accounting, is a foundational tool that drives lean forward in every company using it (more about that in the next article).
Lean Philosophy
At its heart, lean is about maximizing customer value by producing the same product with less waste. Visibility is key. Waste hides in all companies, tucked under inventory and as an engrained part of habitual processes, slowly eating away at profits. Lean knows where waste hides; it exposes waste and eliminates it. Visibility enables actionability.
Most businesses are organized into segmented departments which operate semi-automously from each other. While efficient in some ways, this segmentation creates hiding places for waste.
Lean punches holes through these segmentations by mapping a company’s value stream (i.e. production cycle). Value streams bring together separate parts of the business and organizes everything into a horizontal flow encompassing all aspects of production.
When processes are unified in a value stream, everything becomes visible. Imagine moving a ship though a system of locks, as in the Panama Canal or the Rideau lock stations. Moving from one lock to the next slows down the entire process and any number of things could go wrong. Compare that to sailing down an open river, where rocks and obstacles have been removed. That’s the power of lean.
Lean may sound like a mammoth undertaking, but it thrives on small changes accumulating over time. You can implement it quickly and the first wastes you eliminate are usually right in front of you. You can start with lean right now by looking around your workspace for “things that bug you” (i.e. inefficiencies that have been nagging at you because they feel like obstacles in your routine), and dealing with them.
You won’t see the benefits of lean if you practice it one week and forget it the next. To be truly effective, it needs to become cultural in your company. Get the entire team involved and it will begin to change the way people in your company think about waste.
Don’t expect your successes to be individually large; the whole point of lean is to create a culture that recognizes waste and makes small changes that add up over time. Be consistent and you can expect improved productivity in the short term and increased profit (and morale once everyone is involved) in the long term.
The 5 Principles
Lean relies on iteration (repeating a process again and again to get closer to a desired result) to smooth out processes. Imagine your company’s production process as a bumpy wheel that become incrementally smoother as it turns.
The 5 core principles of lean are circular. As the wheel turns, the principles cycle again and again (which is why careful measurement and alterations are key to success). Measure well, expose waste’s many hiding places, and your bottom line will improve as the wheel keeps spinning.
5 Principles of Lean:
1) Define the value of your product (think of your product from your customer’s perspective and think about what they’re willing to pay for)
2) map every step in your value stream and eliminate all steps that don’t contribute to the end value
3) tighten up the value stream steps so that the flow gets smoother and faster
4) as your flow gets established, make it customer-driven, so that customer demand “pulls” the entire process instead of you “pushing” it.
5) repeat the process again and again, taking a data-driven approach to creating smoother flow and a process with no waste.
While that articulation of the 5 Principles focuses on creating products, let’s look at what it would look if your “product” is an idea (ie. if you’re a lawyer or a marketer).
1) Define what the value of your idea is to your customer
2) Review the entire process that leads to your deliverables, mapping each process along the way.
3) Redesign your process to be as smooth and efficient as possible
4) Remember that it’s about the customer, not about you. The river doesn’t start flowing until the customer, way downstream, opens the dam.
The “pull” of water creates the flow.
5) Get feedback. This is vital. Lean is about analyzing and repeating processes again and again.
