A Lean Guy Reads FORTUNE

As I was catching up on my back issues of FORTUNE, I had a few Lean thoughts as I read.

In the June 9 edition, the article "Wal-Mart puts the squeeze on food costs" caught my eye. It says:

Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain.

Read that again. It says "take costs out." This is different than the stereotype of Wal-Mart "squeezing" suppliers for a lower price. Demanding a supplier accept a lower price is NOT the same as real cost cutting that can be shared. I'm happy if Wal-Mart is really learning how to collaborate on real cost reduction. The article continues:

Ever wonder why that cereal box is only two-thirds full? Foodmakers love big boxes because they serve as billboards on store shelves. Wal-Mart has been working to change that by promising suppliers that their shelf space won't shrink even if their boxes do. As a result, some of its vendors have reengineered their packaging. General Mills' (GIS, Fortune 500) Hamburger Helper is now made with denser pasta shapes, allowing the same amount of food to fit into a 20% smaller box at the same price. The change has saved 890,000 pounds of paper fiber and eliminated 500 trucks from the road, giving General Mills a cushion to absorb some of the rising costs.

I've certainly wondered why some boxes (from Target) are unnecessarily big. The above sounds like a nice example of win-win collaboration and something that General Mills can do other than whining that their costs have gone up. The article also discusses how Wal-Mart is attempting to reduce transportation costs by purchasing more produce from local farmers. It might be a higher unit cost, but it's the total cost that matters, right?

I'm surprising myself that I had nice things to say about Wal-Mart.

In the July 7 edition, a quote from Barack Obama in this article caught my eye (for purely non-political reasons). FORTUNE asked:

How would your management style differ from that of the current occupant of the Oval Office?

and Sen. Obama responded:

And so I think the biggest difference in my management style and George Bush's is that I want a robust discussion around the table with a lot of different viewpoints and a firm footing in the facts. I always want bad news first. Good news takes care of itself.

This is a very Toyota approach. Toyota leaders always ask about the problems first (the "bad" news... although Lean thinkers wouldn't think of problems as "bad"... "No problems is a problem" as they say). I've also heard that Toyota leaders like to ask "what are your top three problems?" before they'll move on to talking about anything positive."

Fact-based discussion. Listening to different viewpoints from people. Putting politics aside, if this is possible in mentioning Sen. Obama, that's the essence of Lean thinking right there.

"Data is of course important in manufacturing, but I place the greatest emphasis on facts." --Taiichi Ohno

Thanks to Craig Woll for re-printing that quote. I was taught that what Ohno meant is that data (numbers in a report) are helpful, but you find real facts by visiting the "gemba," the shopfloor or the place where work actually happens (a hospital emergency department can also be a "gemba.")

I'm not saying "Ohno-bama" is the "Lean candidate" but he has an interesting take on leadership.


Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board

"Rounding" and "Gemba Walks"

StuderGroup - The Magic of Rounding

Here's a good article from Quint Studer about "rounding" -- something Lean folks might refer to as a "Gemba Walk." Studer's writing on leadership and management, although hardly referencing "Lean" or "Toyota," is pretty well aligned with the Lean management system.

His new book, Results That Last: Hardwiring Behaviors That Will Take Your Company to the Top, is inexplicably on sale for just $4.99 at amazon.com right now (I ordered a copy just now, since I haven't read this one yet). His earlier book, Hardwiring Excellence: Purpose, Worthwhile Work, Making a Difference was very inspirational and it's something I wrote about before and recommended even to manufacturing leaders to learn from. We could all apply his methods for "hardwiring" performance in ANY organization.

So back to the article on rounding. Some snippets:

As a leader, you want your employees to be happy, productive, and loyal. Indeed, it’s your job to create conditions that facilitate these qualities.

What a great start, very first sentence. How many managers blame the employees for having "poor morale"??

The good news, says Quint Studer, CEO of Studer Group, is that there is a proven way to stay on top of what your employees really want and need. It’s a concept from the health care arena called “rounding”—and it translates nicely to the world of business management.

“Rounding is what doctors in hospitals have traditionally done to check on patients,” says Studer... “The same idea can be used in business, with a CEO, VP, or department manager ‘making the rounds’ to check on the status of his or her employees. Rounding is all about gathering information in a structured way. It’s proactive, not reactive. It’s a way to get a handle on problems before they occur and also to reinforce positive and profitable behaviors. Best of all, it’s an efficient system that yields maximum ROI.”

Sounds just like a "Gemba Walk" doesn't it? This isn't about going around and just saying hi to everyone, it's "rounding with a purpose" (to use another phrase that Studer uses that I really like).

But is this time consuming? All managers are insanely busy with meetings and reports and email, right?

In a business setting, rounding involves leaders’ taking an hour a day to touch base with their employees, make a personal connection, find out what’s going well, and determine what improvements can be made. Quite simply, it’s a way to gather the information you need to do your job and do it well—in a timely and efficient manner.

One thing Studer advocates is focusing on the positive - what's working well? My understanding is that Toyota leaders always ask about problems first -- what are your top 3 problems? They ask about problems before focusing on anything good. Maybe Studer's approach is more palatable in a typical non-Toyota culture? Many people I've worked with cringe at the word "problem" -- seeing it as a far more negative word than I would myself.

Anyway, be sure to check out the article. Lots of great stuff in there. What do you think? Helpful to you in hospitals or in factories?

About the only nit I would pick is this point in Studer's 9 tips for Rounding:

6. When someone brings up a problem, assure him or her that you will do the best you can to get it resolved. Obviously, there will be circumstances you can't control. But people appreciate knowing that you will try. Sincere effort goes a long way.

Now "servant leadership" (which Toyota and Studer both advocate) is a wonderful thing. But the way Studer words it implies that any time an employee brings a problem to you, the leader, it's your job to fix it for the employee. The Lean approach encourages managers to push problem-solving and improvements to the employees themselves -- if they can.

The Lean leader only takes on problems that cannot be solved by the employees. You don't want to encourage over dependence on you, the leader, to always be the problem solver and the doer. There are certain complex problems or cross-functional problems that DO require a manager's involvement. My advice is that you have to be careful to not take on everything as a manager -- your time is limited... you're only one person. You can't fix it all.

But, you can using "rounding"!! Tell your employees you're borrowing a best practice from healthcare if they're tired of hearing about Toyota. :-)

Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board

Candidates at the Gemba

Video - Breaking News Videos from CNN.com

Sort of a funny video (linked above) on CNN/Headline News about presidential candidates being "clueless" about what they're seeing on the campaign trail and factory tours. The Headline News version (which I can't find online) had overlays that read:

• "Clueless on the Campaign Trail"
• "Candidates often don't know what they're looking at on business tours"
• "Candidates have some silly questions, don't seem to understand the answers"
• "Candidates do a lot of nodding when they don't understand tours"
  

Maybe Headline News doesn't rank high on the "respect for candidates" scale, but they're certainly fair game for mocking.

Now, a highly choreographed plant tour is not exactly the same as true "gemba time" where leaders walk (or just stand) and observe the process, talking to people in a less scripted (or non-scripted) way.

It can be tough being in a gemba when you don't really know the process. I know I've had my "clueless" moments the first time I've done through a particular hospital department. Even your own company executives might not really know what's going on... so to those of you hosting gemba visits, please be patient. If the visitor is really trying, be patient with them.

When Sen. McCain (left, click for larger view) was looking through a microscope and asked what he saw, the host explained they were colon cancer cells. McCain said "There are no stupid questions, right?" That's far better than pretending you know what's going on, don't you think?

Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board

Toyota President Urges Genchi Genbutsu

Toyota juggernaut vows to improve (Detroit News):

Toyota's president is urging his own company to remember the principle of "Genchi Genbutsu," or "go and see." David Mann, author of Creating a Lean Culture: Tools to Sustain Lean Conversions, puts it real simply: "Go the place, talk to the people, see the problem."

"Watanabe, a former purchasing chief who became president in 2005, said Toyota was working hard to improve quality and coordination with its parts suppliers, acknowledging that it had fallen short. 'There are cases where our efforts aren't adequate,' he said.

He said the company also was urging managers and workers to return to the basic tenets of the renowned Toyota Production System, and go to the site of any problem to analyze what went wrong. 'This is something shameful for us to share with you, but it is important,' he said, speaking through an interpreter."

Toyota has its share of problems these days -- quality problems and recalls, but the public face of the company is one of humility and a desire to do better, not excuses. Is Watanabe saying that Toyota has gotten away from the "go and see" approach, or is he just reiterating its importance?

Watanabe's advice is the classic Toyota approach to problem solving, working at the "gemba" (the actual place where work is done) instead of in meetings or conferences rooms. Is there a chance to apply this approach in your company? Has this helped? What stories do you have to share about this method?

Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board

Democrats at the "Gemba"

Clinton gets close-up glimpse of nurse's life - USATODAY.com

It's probably all just political posturing, but Hillary Clinton recently spent two hours shadowing and observing a nurse at a hospital in Nevada.

The New York senator spent more than two hours shadowing Estrada in the fourth-floor medical/surgical ward before heading to Estrada's home for dinner with her and her three children. "I'm following Michelle around today to see what a nurse does," Clinton explained to the patient in Room 471.

Politics aside (and it's tough for me to do that), this is admirable, on the surface. Granted, the RN works a 12-hour day and Hillary and the photographers may have gotten in the way or caused a distraction (always a risk when you go to the Gemba) during their two-hour visit. This was obviously a political gesture, where comments are going to be made that support her political agenda (as any candidate would do). Was she really at the Gemba to truly observe, or was she going in looking for things that support her views? Any of us have to be careful when going to the Gemba that we really use our eyes, not our bias. If you go to the Gemba in your factory with a mindset of "our workers are lazy," you'll find examples of that, trust me.

Other Democrats are doing similar Gemba visits, sponsored by a service workers union (so yes, it's overtly political). On the other side of the aisle, Republican Presidential candidate Rudy Guiliani was criticized for somewhat overstating his "Gemba" time at the World Trade Center site after 9/11. I saw a quote that said something like "shaking hands and saying 'good job' isn't the same as what we were doing." Empathizing with people at the Gemba is good, but going too far in saying "I understand what you're going through" might not seem credible and can cause resentment. Sen. Clinton runs the same risk if she talks like she knows everything about being a nurse after two hours.

I'm sure Sen. Clinton saw a lot of waste and problems and frustration. I wonder if it registers with her that process improvement can help, or if it just cements views that the government and unions must solve everything?

So, we can nitpick her Gemba time, but I'll ask this, for thought:

• How many hospital CEO's or executives (VP or above) have spent two hours shadowing an employee and looking for waste or soliciting improvement ideas?
  
  
• How many manufacturing CEO's or executives have done the same thing recently?
  

If they spent that time out there, what was accomplished as a result?

I'm always honored and humbled when I get time at the Gemba. I place limitations on myself on what I write about my daily work, my Gemba time in hospitals. Yes, as we've discussed here, hospitals are complex. But at some level, it's just people doing work and others managing those people. I don't say "just work" to demean or belittle -- it's work in the sense that all work should be honored and respected.

In that sense, the Lean mindset says we have an obligation to make sure work is designed and not just haphazard (especially in a hospital). It truly is a "type of waste" to see people frustrated and trying to do their best in the midst of a bad system. Work must be designed and managers must be leaders, to make sure people aren't robbed of their right to find "joy in their work," as Deming taught us (again, especially in a hospital). We have an obligation to all of the nurses working long, tiring, frustrated days to help improve the systems and environments in which they work.

A Gemba Walk Example

This is from a blog reader, Mike, in response to an earlier question about the role of senior leadership in a Lean effort. I'm posting this with Mike's permission to get your feedback and comments.

-------------------------

In our facility, the most senior person with an office here is a Vice President. He takes the walk every morning at 9:00am (he will miss some now and then if he's on a customer call, out of the office, or has activities led by our Corporate office - located in another state). He is joined on the walk by our Manufacturing Manager, National Sales Director (when in-house), Inside Sales Manager, Production Managers of the Lean areas (that we have started to-date), Shipping Manager, Production Planner, Purchasing Manager, HR Manager, and the in-house Lean group. If someone is unavailable, he or she will send a representative. While this may sound cumbersome, it is a prime opportunity to have all the people necessary if there is a problem.

Each stop on the walk is centered around a "production" board. The walk starts in Sales, proceeds to Shipping, then one Assembly cell, one Product Line cell, followed by a Kaizen board, the Scheduling board, and concluding with the Purchasing board. If any discussion at a board lasts longer than 3 minutes, the group assigns someone responsible to coordinate a meeting/initiate a review of the issue. All parts of the organization are in the loop and all can provide input to issues as they arise, rather than after the fact. Operators at each location participate and all discussion is as equals. As the Lean Coordinator in the plant, I act as "referee" concerning the time spent and the equal opportunity of the discussion.

As a result, our direct lines of communication have increased immensely. That "soft" value is immeasurable. When we have customers or Corporate dignitaries in, we still follow the same routine. Our customers are often impressed with the ability of anyone on the walk being able to describe the situation at any board (that knowledge is shared via simple metric presentations at the boards, consistent themes from board to board, and regular involvement of everyone to truly understand the flow of products and information.) This walk happens regardless of who is absent. Those available just move forward.

Is this unique or common? Would other companies shudder at the dollar value of salaries involved in this 25 minute exercise daily? Is this "wasteful" in the eyes of others? I can tell from experience, the impact this has on the plant is significant - as described in my response to the reader question about Plant Management participation in the Gemba.

-------------------------

What feedback or advice do you have for Mike and his company? Click "comments" to chime in.

Subscribe via RSS | Lean Blog Main Page |Podcast | Message Board

Today's Dilbert and Product Development

I won't overanalyze this, but here's an example of (yet again) the pointy-haired boss not understanding the business or the products he's "managing."

Not a "gemba walker," that pointy-haired boss (click the image or visit www.dilbert.com for the larger cartoon).

Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board

Reader Question: Role of a Company President?

Since we've been talking about leadership and Lean, it's coincidence that I got this email from a reader. I'll let the blog readers answer this

Posted with permission:

I am [name withheld], 25yrs old, working for a small manufacturing firm of over 70 employees in (Saitama Ken) Japan.

I have been working for eight months in the current company, staring from the scratch with educating the employees through, Learning by doing - Muda, Mura, Muri, 5S, PDCA, Autonomous maintenance, drawing the Current state map, via lectures and group activities lead by a Kaizen leader (Shop floor worker-only ).

I have had my share of employee resistance and management resistance. But the most persistent of all is that from the president who is 41 years old and refuses of go to (Gemba) shop floor.

As a company, we take 30 minutes (Kaizen Time) everyday for Kaizen activities and during the Kaizen time, the president does come to the shop floor. Subject to being present in the company during the Kaizen time. But, he does not agree on going to the shop floor on regular basis – during the actual working hours. He thinks that it is not his job to go to Gemba (shop floor) and observe. But the top managers and Floor managers job and he takes decisions based on the data in files and information from the top managers and floor managers, who in the past did not observe the gemba them selves. But have now started going to gemba regularly for the last one week, due to my repeated reminder.

I would like to request for your thoughts, if possible of the blog readers and contributors about, what is the role of the President in a firm, which wants to or is implementing Lean ?

What do you think? Click comments to answer...

I think this is an interesting example that shows "not all Japanese companies are Lean." Also maybe think about how a 25 year old can influence senior leadership. That's quite a challenge my reader has.

Subscribe via RSS | Lean Blog Main Page |Podcast | Message Board

Going Out Through the "Open Door"

Kent Blumberg: Open door policies that work

Here's another interesting take on the practice of managers going to the Gemba. Kent writes about why "open door" policies that involve waiting for employees to come through that open door to your office aren't as effective as open doors that take you out to the Gemba.

"Gemba" Can Save Your Life?

Study Warns Of Desk Jockey Clot Danger - CBS News

You might have heard of "Deep Vein Thrombosis" and blood clots as being a health risk on long plane rides, but what about sitting at a desk or in meetings all day?

Experts say you should get up and walk at least once every 30 minutes. Are you stuck in your office all day reviewing reports and sitting on conference calls?

If so, here's a health reason for getting up and going to the "Gemba" (the actual place). The Gemba is where problems are most effectively solved. This isn't "management by walking around," nor is it a bureaucratic exercise.

Go talk to your workers, ask them what they would improve in the workplace. Ask them what you, as a leader, can be working on to make things better. If there's a problem that is tough to solve, have a stand up meeting right there, ask the "5 Whys" and try something that fixes the root cause of the problem.

Lean managers love the Gemba more than the love their offices. So, get out there... what can you do at the Gemba this week?

Here is a column written by our friend Norm Bodek on the "Gemba Walk" routine.

A Response to "Gemba, Schmemba"

Kent Blumberg: The Gemba - what it is and why leaders should care

Kent, a reader of and sometimes commenter on this blog, found a blog ("The Corporate Cynic") that made a wild and uninformed attack on the Toyota Production System concept of "gemba."

In the original post, the Cynic ranted, in part:

"I never found out what Gemba means. Is it an acronym? Consultants love acronyms. Is it a classical Greek word? Consultants with PhDs love to use Greek.. Personally, I really don’t care."

If the Cynic wasn't too lazy to do a quick google search on the term, he would have learned what "gemba" is and what gemba is not. It's easy to dismiss his as uninformed rantings.

While it doesn't really deserve the time involved in a response, Kent put together a good response on his blog that prompted some good comments.

Kent said, in part:

A rant over on "The Corporate Cynic" got me thinking about gemba. Jerome writes that the whole concept seems to be a "goofy" gimmick that would just result in more paperwork.

He could not have been more wrong.

Gemba is a Japanese word that means the "actual place." Practitioners of lean manufacturing/lean service talk about the importance of going to the gemba in order to see for yourself what really happens. Going to the gemba is a core principle of the Toyota Way, and should be a core tool that every leader uses.

You won't solve problems at your desk. To find real solutions to real problems, you are going to need to get up, put on your safety shoes, and go out on the shop floor. (Or, put on your shopping clothes and go observe customers in your coffee shop.)

Going to the gemba is not the same as "Management By Wandering Around," another of Jerome's misconceptions. Mike Wroblewski has it right, when he describes going to the gemba as "Management By Standing Still." It's about standing where you can watch the process and staying there for hours. That's right - hours, not minutes or seconds. It's about trying to understand what is really going on.

Amen, Kent. Go visit Kent's blog to read his full thoughts and the reader comments.

Home Depot's CEO and Gemba Walks

Bob Nardelli is Watching

Update Jan 4 2007 --- I really had it wrong on Nardelli, see the latest news and post.

They don't call it a "gemba walk", but in the new Fast Company magazine, there is a profile on CEO Bob Nardelli, who came from General Electric under Jack Welch. Ignore the ominious Big Brother sounding headline and check it out.

...He also spends at least one week a quarter as a "mystery shopper," popping in unannounced to as many as 10 stores a day. "There was a perception that I was going out to catch people," he says. "Over time they understand that I just want to see it like a customer. I can do my job better if I have firsthand exposure to the good, the bad, and the ugly."

That seems like a perfect illustration of the concepts "Genchi Genbutsu" (go and see) and "Gemba" (actual place). Rather than relying on reports to run a plant or company, put on some walking shoes and "go and see" at the "actual place", whether its a factory or a store. I'm sure Nardelli is a much more effective leader because he sees what it's like as a customer (assuming the employees don't know what he looks like and they haven't been tipped off that they're coming).

When I used to work at Dell Computer, Michael Dell was known for popping in, unannounced and without an entourage, at the factories in Austin. He would just walk around, look, and listen to people. I had a great plant manager at GM (trained at NUMMI with Toyota) who did the exact same thing. He spent at least 1/3 of his day walking around the plant, coaching, and listening to people. He knew what was going on, more so than the monthly accounting reports would tell him.

Go read the wonderful article "The Gemba Walk" by our good colleague Norman Bodek.

Strong Supervision: The Key to Long-term Kaizen

Kaizen and Lean Manufacturing thoughts | Gemba Panta Rei

This is a great article by Jon Miller from the Panta Rei lean blog.

Here is a link to the Financial Times article he referenced (you have to do a free trial to the website to read it).

I can't agree more about the role of strong and capable supervision. At my last manufacturing company, they had long ago pulled out the first line supervisors as "non-value added", yet another "cost savings" that ends up costing more money I believe. Each manager had at least two departments with at least 30 employees each. As Jon writes, the managers were simply overwhelmed and could not spend enough time on the gemba. They certainly didn't know their processes well enough to train or coach operators on the process.

As with other factories I've seen, if you let a factory run without supervision, you'll ge the results you deserve. From our lean group, we argued a long time that they needed to add "working team leads" to each department, ala Toyota. They would be the "best" of the operators from each team (someone with the right coaching and problem solving abilities). Management agreed, in general, to the concept and even talked to HR. But, I think cost got in the way.

Strangely though, they added another production manager, so you now had three instead of two (scope of employees went down to about 20). But, for the cost of a manager, they could have added a number of team lead roles (taking existing employees, giving them a pay boost, and then reducing enough NVA work so the team leader didn't have to run production 100% of the time). But, I think management's bias is that "management" fixes things, not operators (even under the name of "team lead"). Sad.