Matt van Wyck, a graduate at the MSc in Lean Operations at Cardiff University and a former metallurgical engineer, designed and deployed a lean transformation programme across the South African operations of DeBeers. In this article, he gives a personal reflection on what he learned while on the field.
The world of business is changing fast, and the only certainty is that the pace of change will accelerate. It is in this world that flexible, integrated, simple and waste free organisations will thrive, and the adoption of business improvement initiatives has become the rule rather than the exception.
Although many organisations have adopted various forms and shapes of business improvement and transformation methodologies, the success rate of such interventions is less than convincing, and failures are more abundant than success stories. The reasons for these failures are well documented, and we all agree that success requires very focussed and specific thinking and acting from the executive layer through to the people operating the process which generates value.
My career started as an engineer in operations, and in trying to continuously improve and understand how the operational engine works I stumbled upon lean. Studying lean has been a sobering experience, depicted by many layers of learning, and like peeling an onion each layer holds new wisdom.
THE LAYERS OF MY LEARNING EVOLVED AS FOLLOWS:
- The realisation that small improvements hold significant value (kaizen). As an engineer working in an environment which celebrates heroic feats, the hunt for value is focussed on significant financial improvements.
- Understanding that solving problems requires a simple yet scientific methodology (PDCA). This cannot be done around a boardroom table or from an office, and time spent at the shop floor is imperative.
- Understanding that people at the lowest level of the organisation hold the key to creating value. Every moment of the day, they enable operating systems which generate value, and understand the inputs required to make these work better than anybody else. Both hands and brains must be respected.
- Satisfying the needs of the customer, whether external or internal, created the focus required for improvement. The more visible and simpler these needs are made at the front line, the easier it is to improve value and enable flow.
- The awareness that physically doing things differently changes behaviour. John Shook’s saying that “it is easier to act yourself into a new way of thinking than to think yourself into a new way of acting” holds significant value.
- Doing things differently requires a deep understanding of how the processes work. This is achieved by physically mapping the value stream, standardising the best way of doing it now, and looking for opportunities of doing it better. As Deming said: “It is not enough to do your best; you must know what to do, and then do your best.”
- Doing the right things requires the understanding and leveraging of inputs rather than outputs. Many western management philosophies teach to use outputs to transform organisations, but these beliefs create organisational designs which stifle agility and must be guarded against as it is the leveraging of inputs which underpins improvement.
- Understanding that none of these layers will lead to a successful transformation if not understood and aligned as part of a system that allows every individual, every day, to improve on what they did yesterday, to improve the product for the customer.
- To buy into lean management needs to see what good looks like. Do create and leverage networks, visit good sites and interact with people who have done this before.
- This is required to change the system, to enable a new way of work and force compliance towards a better organisation. It is like reprogramming the organisation’s default button to prevent the people from returning to bad habits.
The layered nature of lean unfortunately creates complexity. To return to the onion metaphor, managers often buy what the outer layer offers, and many consultancies exploit single layers of the whole. The real transformation is, however, concentrated in the centre of the system, which is hidden from view until the journey is experienced and understood.
It is the quest of understanding what lies at the heart of lean that guided me towards studying the role that management and measurement systems play in the sustainability of lean. My hypothesis was that these systems form the central nervous system of a lean transformation. If aligned, these systems will enable transformation by creating the right context, focus, integration and interactivity (adapted from the work of Dr. Dean Spitzer) to create superior organisational management and performance. If wrong, the deployment of lean will almost always fail in the medium to long term.
My view is that the core of lean transformation is to be found within the management and measurement systems which connect the brain (strategic aspect of the business) to the hands (front line execution) of the business at which point value is being added. This creates the context for fast, decisive action, breaks down functional silos, and leads to the achievement of higher levels of competitiveness.
Although improving the financial performance of an organisation is imperative, this has to be balanced by a respect for the individual (the whole-person philosophy). Within such an environment, measurement functions not only act as a performance yardstick but become a social phenomenon.
Measurement systems play a fundamental role in sustaining and embedding a lean deployment as it focuses the efforts on the right things. Martin Preece, a general manager at one of the operations studied, said: “Measurement is the catalyst which replaces the University of Lean by the Factory of Lean”. When the new measurement system was deployed at this operation, it resulted in an almost instantaneous improvement of the critical processes which yielded significant value.
However, effective measurement requires a supportive organisation where everything is aligned and synchronised towards achieving a common goal. The right measures must be supported by both integration (between departments to enable flow) and interactivity (socialisation process). These requirements will, however, not be met by either a partial or a tools approach to lean.
This interaction of the organisational design with standardised work and the right measures is critical, and must be coordinated through a common management system. This complete synergy ensures that the measurement system translates the strategy into the right focus at the front line and that this work is performed in the best known way. Any break in this integration will lead to instability and unpredictability of the value stream.
My research studied the effect of the measurement system on a lean deployment in a leading mining and luxury goods company. The case study emphasised that any disconnects between the fundamental requirements of a measurement system will impact directly on a lean deployment, and indicated that there is a direct correlation between the maturity of a lean deployment and the maturity of the measurement system.
Within operations that were struggling to implement lean, the following issues were fundamental to the problem:
- A lack of management interaction with the measurement system;
- The position of strategic output measures at the front line which they could not control or impact on;
- Inflexibility of measures to adapt to changing circumstances;
- Lack of trust in the measurement system as it is often used against employees;
- The data gathered in measurement is not turned into knowledge;
- Measurement frequency and interactivity too low to be pro-active when issues arise. Management is thus blind to shop floor issues and cannot respond to deploy countermeasures;
- Measurement is not used to guide improvement efforts;
- Little cross-functional learning occurs between departments;
- That causal relationships between measures are not understood (poor understanding of the value stream);
- Lack of a management effort to tap into the brains of frontline employees;
At the front-line level of the organisation, these translated into the following major shortcomings:
- Low levels of alignment to the company goals;
- Little awareness of what is expected from them on a daily basis;
- Inaccurate understanding of customer expectations;
- Low utilisation of employee capability and skills;
- Low levels of commitment to come up with improvement ideas.
The research concluded that a supportive management style is required both to energise the lean journey and to tap into the immense power of a well-designed measurement system in support of such a journey. Such a management style is clearly described in the literature on lean, and positioned in the work of both David Mann and Steven Spear.
A transformational measurement system must be characterised by balanced measures aimed at guiding and focusing lean efforts. In its absence, the efforts will result in a disillusionment which will probably result in the abandonment of a lean deployment. The findings of this research pointed to a number of key capabilities which are required to guide deployment efforts:
- A well designed measurement system is a key supporting element in any lean implementation;
- The design of such a measurement system should cater for the systemic requirements which underpin successful lean deployments;
- The measurement system will function optimally only if there is a thorough understanding and integration of the four key requirements (context, focus, interactivity and integration);
- Such a measurement system must be aligned to the strategy (and, hence, customer needs) and aim at managing the entire process (flow) in order to create value;
- Although standardisation of the system is necessary, space must be created to accommodate the evolutionary nature of measurement, as measures will change as the value stream is improved, and the causal relationships between measures crystallise;
- Measurement must be supported by all the management levels within the organisation. Care should be taken to avoid the de-linking effect of functional autonomy;
- Every individual must be aware of their specific roles in supporting and executing measurement. Any gaps in performance should become the main focus of improvement efforts;
- A significant effort is required to ensure that measurements are balanced between quality, cost, delivery, safety and morale;
- Although significant gains are made possible by deploying a well-designed measurement system, organisations must be aware of the potentially devastating power of measurement if the measurements are misaligned to the rest of customer requirements. Accordingly, organisations must allocate the required resources and management time to aligning measurement.
- By aligning effort through the deployment of a scientifically designed performance measurement system, the complexity of a lean implementation is significantly reduced and a platform will be created from which everybody will be able to contribute to improvement.
An effective and aligned measurement and management system is an integral part of a successful and sustained lean implementation. This system should cater not only for measurement of the key processes in the organisation, but be enabled by engaged leadership and guided by standardised work.
Should all these aspects be present and acted upon on a daily basis, the chance of embedding a successful lean deployment is highly increased.