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Lean and the Corporate Agenda with Guest Jacob Stoller
This document discusses how corporate agendas can stifle lean thinking and provides examples of lean leaders who changed corporate agendas. It explores the basic language of corporate agendas and six schools of thinking that hinder lean, such as short-term focus, either/or thinking, and disrespect for production staff. Case studies of lean leaders like Art Byrne and Dr. John Toussaint demonstrate how changing metrics and empowering staff can improve both profits and outcomes. The document advocates studying lean management systems and getting involved in discussions to help shift corporate priorities towards lean.
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Introduction to lean and consulting expertise in organizational improvement.
Emphasis on financial aspects like margins, costs, and balanced scorecard for lean implementation.
Discussion on objectives, KPIs, targets, and initiatives for assessing business success.
Identifying non-lean thinking challenges such as short-term focus and segmentation.
Explains pitfalls of GAAP accounting, automation faith, and focus on short term vs. long term.
Art Byrne's transformation at Wiremold emphasizing value in continuous improvements.
Dr. John Toussaint's approach to problem-solving in healthcare, emphasizing safety and standards.
Tom Everill's initiative showcasing profitability alongside employing people with disabilities.
Overview of lean gaining popularity, shifts in corporate agendas, and the call for dialogue.
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Lean and the Corporate Agenda with Guest Jacob Stoller
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- 2. Consultant: Wehelp organizations in all industries deploy Lean & build outstanding organizations. Author & Speaker: Karen Martin, President The Karen Martin Group Inc. @karenmartinopex 2 www.ksmartin.com/subscribe
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- 4. Welcome to the landof corporate agendas, where things aren’t always as we’d like them to be! 4 © 2015 Jacob Stoller
- 5. Today we willexplore… • The basic language of corporate agendas • Six schools of corporate thinking that stifle lean • Examples of how lean leaders changed the game • How you can join the conversation about the needs of your leaders and your business © 2015 Jacob Stoller 5
- 6. © 2015 JacobStoller • Define expectations. • Determine compensation. Corporate agendas matter because they… And they must change for lean to go enterprise wide. 6
- 7. © 2015 JacobStoller Much of the agenda is about trying to control how outsiders will judge the organization. 7
- 8. © 2015 JacobStoller Money will always be an underlying issue in every corporate agenda. 8
- 9. © 2015 JacobStoller A few words about not-for-profits… Yes, this means you! 9
- 10. Proper Financial Priorities 10 1.Grow Margins (Profit) 2. Grow Top Line (Gross Sales) 0 2 4 6 8 10 12 2011 2012 2013 2014 Gross Sales Expenses Profit From The Karen Martin Group, Lean And Your Top & Bottom Lines
- 11. © 2015 JacobStoller Improving the financial picture Revenue Future Costs Variable Costs Fixed Costs $ $ $$ 11
- 12. © 2015 JacobStoller It’s not just money – balanced scorecard approach Vision & Strategy Financial Internal Business Processes Learning & Growth Customer 12
- 13. © 2015 JacobStoller Executive measurement tools Objectives Where are we going? Key Performance Indicators (KPIs) How do we measure success? Targets How much is enough? Initiatives How do we get there? 13
- 14. © 2015 JacobStoller Financial Objective: Reduce operating expenses KPI: Material costs Target: Reduce by 6% Initiative: Get volume discounts 14
- 15. © 2015 JacobStoller Internal Business Processes Objective: Streamline accounting department KPI: Days to close at month end Target: Reduce from 12 to 10 Initiative: New accounting software 15
- 16. © 2015 JacobStoller Learning & Growth Objective: Improve morale KPI: Employee satisfaction percentage Target: Increase from 80% to 85% Initiative: Employee newsletter, special events 16
- 17. © 2015 JacobStoller Customer Objective: Increase market share KPI: Net promoter score Target: Increase by 5 points Initiative: Customer service training 17
- 18. © 2015 JacobStoller There’s some good news here… 18
- 19. © 2015 JacobStoller And some bad… 19
- 20. © 2015 JacobStoller The challenge is that a lot of non-lean thinking gets embedded in these measurements. 20
- 21. Non-Lean thinking 1. Short-termfocus 2. Either/or thinking 3. Disrespect for gemba & people who work there 4. Segmentation of purpose 5. Blind faith in automation & technology 6. Using GAAP accounting to run the business © 2015 Jacob Stoller 21
- 22. 1. Short-term focus •Obsession with annual, quarterly, monthly results. • Shareholder value is the law. • More emphasis on deal making. © 2015 Jacob Stoller Lean is a long-term strategy. 22
- 23. © 2015 JacobStoller 2. Either / or thinking Cost Profitability Quality Market Share 23
- 24. © 2015 JacobStoller Roots of either / or thinking Michael Porter’s competitive strategy matrix Nature of Competitive Advantage Broad Scope Narrow Scope DifferentiationLow Cost Focused Low Cost Focused Differentiation 24
- 25. Lean says… © 2015Jacob Stoller We can improve these things simultaneously through continuous improvement. 25
- 26. 3. Disrespect forgemba and people who work there © 2015 Jacob Stoller Innovate Produce Sell 26
- 27. Lean says… © 2015Jacob Stoller Production creates the value that people pay us for. 27
- 28. 4. Segmentation ofpurpose © 2015 Jacob Stoller R & D Production Customer Service Sales KPIs ≠ KPIs ≠ KPIs ≠ KPIs 28
- 29. Lean says… © 2015Jacob Stoller We’re all in the value stream together. 29
- 30. 5. Blind faithin automation and technology • Paving cow paths • Locking in waste © 2015 Jacob Stoller 30
- 31. Lean says… © 2015Jacob Stoller Fix the process first! 31
- 32. 6. Using GAAPaccounting to run the business © 2015 Jacob Stoller Shame and blame Hold managers accountable for variances Compare projected against actual Manage to targets Forecast and Set Targets January February March April? 32
- 33. Lean says… © 2015Jacob Stoller What a waste of time! 33
- 34. © 2015 JacobStoller Changing the Corporate Agenda 34
- 35. Art Byrne’s 10-YearTransformation at Wiremold © 2015 Jacob Stoller Up 14 Times Operating Income Gross Profit $30M to $770M 38% to 53% Valuation 35
- 36. Art’s Value StreamMetrics Metric (KPI) Calculation Customer Service Percentage % of orders delivered on time Productivity Sales / worker hours Quality Reduction in defects over previous year Inventory turns Cost of sales / average value of inventory Visual control Measured by quality team © 2015 Jacob Stoller There’s no room for segmentation of purpose or either / or. 36
- 37. Art vs. shortterm thinking • “From 3 to 20?” • The big leap of faith © 2015 Jacob Stoller 37
- 38. Art vs. GAAPAccounting © 2015 Jacob Stoller Real numbers, simple format (Orry Fiume) 38
- 39. Art didn’t managethe gemba, he managed in the gemba. • Respect • Empowerment • Trust © 2015 Jacob Stoller “Your people are your only asset that appreciates.” 39
- 40. Thedacare – Dr.John Toussaint Architect of a new management system for healthcare © 2015 Jacob Stoller 40
- 41. The Healthcare Conundrum ©2015 Jacob Stoller Financial Pressures Unacceptable Outcomes 41
- 42. In healthcare, either/ or spells disaster. © 2015 Jacob Stoller Defects cost lives… So do delays. Together they account for 30% - 40% of total healthcare spend. 42
- 43. To solve healthcare’sthousands of problems, we need thousands of problem solvers. © 2015 Jacob Stoller 43
- 44. Segmentation of purposeis a show stopper, calling for a re-think of physician autonomy. • Safety over authority • Work standards apply to everybody © 2015 Jacob Stoller 44
- 45. Northwest Center –Tom Everill © 2015 Jacob Stoller Adding social purpose to the corporate agenda 45 “What I noticed in the corporate world is that nothing is impossible.”
- 46. The initial assumption ©2015 Jacob Stoller “Companies can either make profit or employ people with disabilities.” ?Profit Social Purpose 46
- 47. Tom’s hypothesis “Companies canboth make profit and employ people with disabilities.” © 2015 Jacob Stoller 47
- 48. The conclusion “Companies canmake higher profits because of their workers’ diverse abilities.” © 2015 Jacob Stoller 48
- 49. Results… • All divisionsprofitable. • Revenues up 500% in 3 years. • Tom hopes other employers will “get it” and put him out of business. © 2015 Jacob Stoller 49
- 50. Looking ahead… • Lotsof lean activity since 2008. • Lean slowly gaining ground in business schools. • Better dialogue between lean and non-lean worlds. © 2015 Jacob Stoller 50
- 51. The tide maybe turning on… • Shareholder value • Accounting practices • Tolerance of waste • Hierarchical management © 2015 Jacob Stoller 51
- 52. • Study leanas a management system. • Learn about business issues in your sector. • Join the broader conversation. © 2015 Jacob Stoller 52
- 53. At the endof the day…. © 2015 Jacob Stoller Lean has better answers! 53
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- 55. Questions and Comments? © 2015Jacob Stoller 55
- 56. Karen Martin, President @karenmartinopex Blog& newsletter: www.ksmartin.com/subscribe © 2015 Jacob Stoller 56