Rich Sheridan, CEO of Menlo Innovations, on His Book ‘Joy, Inc.’ and Building a Workplace People Love


Joining me as my guest for episode #189 is Rich Sheridan, CEO and Chief Storyteller at Menlo Innovations, a software development company in Ann Arbor, Michigan. Rich is the author of the new book that I'm really enjoying: Joy, Inc.: How We Built a Workplace People Love. Learn more about the author and the book at You can also download a free chapter here.

There's so much to love about his book and what they are doing at Menlo. I think it's great to start a new year, 2014, with a look at a book that gives us hope about creating workplaces where employees are fully engaged and everybody wins – customers, company, and employees. I'll have a chance to visit Menlo in about two weeks when I'll be in Michigan for my public Kaizen workshop, so I'll report back on what I see during that visit.

For a link to this episode, refer people to

Some of the topics I was taking notes on as I read the book (through chapter six):

  • “You can be joyful without being happy all the time”
  • Menlo has built upon “extreme programming” and Kent Beck‘s work there
  • Their “Menlo Way” is worth looking at
  • As Toyota has done, Menlo doesn't mind teaching competitors about their methods (because this serves their mission to reduce suffering in the world, including the suffering in bad workplaces)
  • They work really hard to break down “towers of knowledge” in the organization
  • Menlo emphasizes direct customer contact and understanding their problems and what they need (often better than the customers could articulate on their own in a traditional software approach)
  • Their “high tech anthropology” approach (HTA) starts with understanding customers better and then iterating and testing designs (often starting with crude prototypes and mockups)
  • Their QA process focuses on reducing delays and shortening lead time (along with other approaches that are different than traditional QA)
  • A reader will recognize ideas that are similar to Deming, Lean, Lean Startup, Agile, and more… combined into a powerful and cohesive articulation of culture and strategy

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Automated Transcript

Announcer (1m 2s):
Welcome to the Lean Blog podcast. Visit our website Now, here's your host, Mark Graban.

Mark Graban (1m 12s):
Hi, this is Mark Graban. Welcome to 2014. It's January 2nd, and this is episode 189 of the podcast. We're kicking the year off. We're gonna have a lot of great podcasts coming up. And my first guest of the year is Rich Sheridan. Rich is the CEO and Chief Storyteller at Menlo Innovations, a software development company in Ann Arbor, Michigan. And the reason we're talking today, we're gonna be talking about Rich's new book. It's called Joy, Inc.: How We Built a Workplace People Love, and I'm really enjoying the book so far there. There's a lot to love about what Rich is doing at Menlo. I think it's really good to start a new year with a book that's very optimistic and I think gives us hope about creating workplaces where employees are not just happy, but they're, they're joyful.

Mark Graban (1m 58s):
As Rich talks about, they're fully engaged. Everybody wins in terms of customers, employees, the company. And I'm gonna have a chance to go see firsthand. I'm gonna be visiting Menlo in about two weeks. I'm gonna be in Michigan for a workshop and some other things. So I'm gonna be able to report back through my blog about that visit at If you wanna stay tuned there. If you wanna link to this episode, go to I've got some other notes and links to, to Rich's book. There's a video, a book trailer about the book. And I certainly hope you'll go by the book, whether you work at a software company or not, because I think these ideas about how to better understand your customer needs, how to create a great workplace, that's something that can apply in so many different settings.

Mark Graban (2m 46s):
So I want to thank you for listening and hope you'll subscribe to the podcast through iTunes, Stitcher, or other ways. If you go to lean, you learn how to do that. Happy New Year, rich. Hi, it's great to have you as a guest on the podcast. Thanks for joining us.

Rich Sheridan (3m 4s):
Great to be here.

Mark Graban (3m 5s):
So we're gonna talk about your, your book, a lot of great stuff in there. Can you start off maybe just first, you know, introducing a little bit about yourself and your background and Menlo Innovations?

Rich Sheridan (3m 16s):
Sure. I am the CEO, chief storyteller, as we like to say, and co-founder of Menlo Innovations. We are a software design and development firm in downtown Ann Arbor, Michigan. And we design and build software for others, and we do it based on a culture and a process we use that we refer to as the business value of joy.

Mark Graban (3m 44s):
So I think that, you know, is really interest, you knows, maybe a rare and and unique concept to build a company on. You know, in the book you talk about an intentionally joyful culture. So what, what does that, what does that mean in a nutshell? What's the effect that has on on your employees and and the, the company's performance?

Rich Sheridan (4m 3s):
Yeah. As, as you know, we do a lot of tours here. We're over 300 tours for well over 2000 people this year alone. And when people come, I introduce us as a company that has created an intentionally joyful culture. And I have to admit, almost every time I do it, people look at me funny and they might say, rich, we're here to hear about your software process and your methodology and your practices. We wanna see the process at work and, and why are you talking about joy? And I point back to this room full of people and I say, well, pretend half of my team has joy in the other half. Doesn't, which half would you want working on your project? And of course, they always want the joyful half of my team. And I asked them why.

Rich Sheridan (4m 44s):
And they said, well, they'd be more productive. They, they'd be more engaged, they'd care more about the outcome. They produce higher quality. They, you know, and so very quickly they get it that there is in fact tangible business value to joy. But for us, what I tell them is, I said, our, our focus on joy is external to the company. We want to make a difference in the world with the software that we design and deliver. We wanna delight people. We want them to thank us for the work that we did. We want them to tell us that somehow or another in their walk, when they touch the computer that holds the software that our team created, that we made their lives better, we made their jobs easier, we made their them more productive.

Rich Sheridan (5m 29s):
And they tell us they love the experience. And if you know anything about software, you know, that's about as rare an experience as you can have in our industry. Most software sucks. Most people say, I hate this thing. Why does it work like this? Or it doesn't work at all. And so there's errors and bugs or it didn't ever deliver, and we just didn't want that for ourselves. So we created this intentionally joyful culture to focus on that purpose and that mission and the way we describe it's to end human suffering in the world as it relates to technology. And we take that very seriously.

Mark Graban (6m 3s):
Well, in, in the book, you, you talk about, you know, previous companies that, that you who had worked in and you know, I think, you know, all of us unfortunately, have worked in, you know, a, a joyless or a miserable workplace. What, what, I mean, how, how, give us a maybe a story that, you know, contrasts, you know, kind of like I said, you know, an environment where, where people aren't happy to a joyful culture. How does that translate into, you know, the, the, the environment? If, if people are there on a tour, what would they see that that exhibits that joyfulness?

Rich Sheridan (6m 38s):
You know, when you, when you walk into Menlo, you can actually feel the energy when you walk into the room. It's palpable. It's, it's a big wide room. It's noisy, it's messy. There's we're, we use tact, simple handwritten index cards to drive our process that are push pinned to wallboard displays with yarn and sticky dots that indicate status and progress and, and quality measures. And so, you know, you can, you can see it, it's a visual process in a big open room. You can see every element of it.

Rich Sheridan (7m 19s):
There are no cubes or offices or walls or doors. I sit right out in the room with everybody else. And this is about as different from my earlier career as you can imagine. You know, my industry is often in industry of sensory deprivation chambers. You know, we, we put the programmers in their quiet darkened cubicles. We let 'em put earbuds in their ears. And we wonder why we have communication challenges in our technology projects. And it's probably because people just aren't talking to one another.

Mark Graban (7m 51s):
To, to delve a little bit deeper into joy. I mean, you say in the book that this is not the same as quote unquote having fun. That, that people aren't, aren't goofing off, that they're connected to, to the company's work. And, and can, can you talk about that and how you create that alignment, that, that purpose changing the world?

Rich Sheridan (8m 9s):
You know, is there happiness here? Is there fun here? Sure. But that is our purpose. That is our mission. This is hard work. Much of the software we build often ends up holding the lives of people in its hands. And if it doesn't hold the lives of people, it often holds the lives of the companies for whom we're doing this. Because, you know, there's not a business today that can run without its software working. Well, and, you know, and that transcends the internal operations, the company. It's often the way that their customers interact with them as a business is through software, through websites, through apps, through applications or, or you call them up and there's somebody on the phone is working with that software.

Rich Sheridan (8m 54s):
You go to a bank and the the teller on the other side of the window is, is working with a computer to transact their business with you. And so it is imperative for organizations these days, for their software to work incredibly well. And quite frankly, building great software, especially if it's complex, it's just plain, ordinary hard work. It's complex requires teams of human beings working together. And so everything in our culture is focused on producing a great outcome for that activity. And so it's hard work, it's energizing work because, you know, for example, I'll just give you a tangible example of what's happened here with this different kinda approach we've taken, our phone doesn't ring with problems.

Rich Sheridan (9m 40s):
We have visitors come in and they look at me and they're like, rich, your phone isn't ringing. Yeah. Like, yeah, it doesn't ring with problems. We don't have a hotline, we don't have support desk. I haven't dedicated 30% of my staff to fixing problems the team has created in the past. And they look at me and her eyes go wide, and they're like, rich, we get hundreds of calls per day because of problems in the software delivered to the world. I'm like, the last time this team remembers a software emergency is 2004. That's crazy. I mean, that's so different than my previous life. And as Deming said, way back when anyone, all anyone ever asked for is a chance to work with pride. Our team gets that here.

Rich Sheridan (10m 20s):
And that's where the joy comes from. Imagine you get to do that every day.

Mark Graban (10m 25s):
Yeah. You're, you're right. And you know, Dr. Deming talked about pride and, and joy. What did the term joy come from Dr. Deming's work? Or did, did you, was that just a parallel in things you've studied?

Rich Sheridan (10m 40s):
You know, we, we established this mission in our beginning days to end human suffering in the world as it relates to technology. And the way we chose to do that was to return joy to what we believed as one of the most unique endeavors mankind ever undertaken. The creation of software. So we've used those words since the beginning days of Menlo later, you know, a lot of people start discovering us, you know, the lean community has discovered us, the Deming community has discovered us, and they come here and they start sharing with us their teachings and, and the lessons they've learned in those walks. And they find these astounding parallels.

Rich Sheridan (11m 22s):
So for us to find out that Deming himself talked about joy, well that was just a delight for us because we, we just chose that word because it was how we felt about what we wanted to accomplish in the world. And I think most people, when they, when, whenever they gathered together in a group, whether it's in a community, in a school, in a church at work, we all wanna work on something bigger than ourselves. We all wanna deliver some lasting effect on the world. And, and our team gets a chance to do that here. And, you know, and, and when we've, when we've been introduced into the, into the world of lean and, and the people who really do it well, or the teachings of Deming, we see the alignment.

Mark Graban (12m 3s):
And, and you know, speaking of lean, you, you spoke at the AME conference this year. Is that your Yeah. First primary interaction with, with the, with the lean community or you're there in Ann Arbor. There's a lot of people.

Rich Sheridan (12m 16s):
Yeah. You know, Jeffrey Liker is a great friend of Menlo, as is Mike Roth. They're here all the time because they're both professors at the University of Michigan. So they become great friends. I actually delivered a keynote address in Phoenix to the AQ conference on Lean and Six Sigma. And in some ways, that conference was my coming out party for the Joy message. And it actually ultimately directly led to the creation of Joy Inc. The book. And then I went to the AME conference in Toronto just a couple of months ago, and they had given me one of the big rooms and there were 400 seats in the room. And literally every seat was filled and they were jammed out into the hallway.

Rich Sheridan (12m 59s):
And, and I, I will say this to you, and I said the same thing to them. My industry, the software industry has so much to learn from the manufacturing industry. You guys, as far as I'm concerned, are 20 years ahead of us in terms of the lessons you've learned and applied and the rigor and the discipline and the process focus and the methodology focus. And quite frankly, I, I think, you know, the people who really practice Lean Well are the ones who get, it's about the people. And that's what I really enjoy about interacting with the lean community is that the, you know, there's, there's, I think there's a big portion of lead community that focused on waste and spreadsheets and cost reductions. And it's not about the people, but the people who really get lean in my walk, the ones that interact with me are the ones who understand it's about the people.

Mark Graban (13m 48s):
Yeah. And I, I think that's a common theme. You know, and I attended the ASQ conference, there was another Ann Harbor, speaker Ari from Zingerman's was there talking about, you know, the workplace culture and environment. And it's all about people, you know, and, and, and you know, I think it's, it's great that people in different industries can learn from each other. We have, you know, people from hospitals visiting factories, we have people from manufacturing actually going and, and visiting some hospitals that are doing great work with, with Lean Do, do you have people from other industries outside of software coming and, and doing those tours that you mentioned at Menlo Innovations?

Rich Sheridan (14m 26s):
Yeah. Toyota has been here, you know, all the, all the automotive makers have been here for, sends people by the hundreds here just as General Motors. And so we, we get all kinds of visitors here from all industries. Perhaps one of my, my most enjoyable visits on a regular basis are schools that send their teachers, their administrators, and even their students here. We, we host an entire seventh grade class from a local middle school every year here. We parade about 180 kids through every year. And they, they engage with our team.

Rich Sheridan (15m 8s):
They, they, we take them through some exercises and the educators look at what we've created here, and they recognize that we created something that we earned for. And that is a learning organization, as Peter Sangi describes in the discipline. I knew when I read that book by Sangi, I was in my personal trough of disillusionment in my career, in my profession. And I saw the wisdom of what he described in that book. And I wanted that wisdom. It took me another 20 years to get there. But we have a learning organization here. We have short cycles and communication and feedback loops and transparency across the organization so that we can in fact create an environment where learning happens every minute of every day.

Mark Graban (15m 57s):
Yeah. And, and that's a great goal. I hope you're not setting up unrealistic expectations for the kids, you know? Cause we, we need more by the time they're gonna be in the workplace, hopefully we have more workplace environments that look like what, what they saw.

Rich Sheridan (16m 12s):
I, I tell the students when they come here, I I tell them, you know, when you go home tonight and you're sitting at the dinner table and your parents ask you the typical question of, you know, how was your day today? Instead of just saying, fine, say, you know what? I figured out today that work is going to be fun. And then see what your parents say. They'll look at you and say, yeah, what the heck happened to you today? And, and tell 'em about what you experienced and have 'em come here because, you know, as, as we determined years ago, there's nothing here. We're trying to keep a secret.

Rich Sheridan (16m 52s):
That's one of the reasons I wrote the book. We, we think we've discovered some fundamental principles of how to organize human teams. Not that everybody should be like Menlo. We're not trying to say that this is the only way to do things. But there's some fundamental principles at work here that I think when people come and they see a tangible living breathing example that they can peer into, they can perhaps take some of that back with them and start to change their own environments

Mark Graban (17m 20s):
Now. And then some of those things that you're, some of the things people would see in the workplace, you know, the paired programming that people might be familiar with from Kent Beck and Extreme Programming, daily stand-ups, work authorization boards. Yeah. How in, in, in a nutshell, how do those practices and, and other things help create that team environment?

Rich Sheridan (17m 42s):
You know, most organizations operate in chaos. It's the land of never getting anything done. Right? You, you're being interrupted all day. People are coming in with higher priorities than the one you're working on now. And you go home at the end of a very long day and you're like, oh man, I got nothing done today. Bureaucracy and, and templated documents and sign offs and committee reviews. And you end up in a land of never getting anything started. What humans really crave and where you can get high productivity and high engagement is simple, repeatable, measurable structure.

Rich Sheridan (18m 24s):
And that's what they get with all of these paper-based artifacts and a big open room. It is such a predictable environment here. Everybody knows what they're working on. Everybody knows it from one end of the day to the other. There's no ambiguity. And if you, if you filter out ambiguity, fear begins to fall. You know, most people go into work and they're like, I'm not sure what I'm supposed to be doing today. I'm not sure what the boss is expecting of me. They, I know we got lots to do, but what's my highest priority here? There's no ambiguity. So fear begins to fall. And if we can get enough fear out of the room, then all of a sudden people begin to trust each other. And you get collaboration and you get teamwork.

Rich Sheridan (19m 4s):
And, and once you have teamwork, like the kind we see every day, you start getting that innovation, that creativity, that imagination, that invention that every corporation on the planet is looking for right now. I mean, this is a time where the world has gotten very complex, especially in the software industry. And we now need to focus on how do we organize the humans in a more effective manner. That's our big, that's our big frontier today. It, it's not about technology. It's, and, and I'm talking not men's big frontier. I mean, the world's big frontier is right. How do we get more effectiveness out of groups of people working together?

Rich Sheridan (19m 47s):
And we gotta work at it. We gotta, we gotta structure it. We have to think about that as a, as a, as a discipline of management. Yeah.

Mark Graban (19m 55s):
Well, and it, it, it's interesting that you talk about that structure leading to innovation and creativity. Cuz I, I think a lot of times, and, and there's a phrase you used in the book. You talked about, you know, poorly informed lean approaches and organizations where, you know, lean unfortunately is, is used to create more control, more bureaucracy in, in a way that's either, you know, demoralizing or, or dehumanizing. Instead of like, we see in, I think in, in good, you know, I think, you know, a real lean environment, you know, in healthcare for example, that that structure allows, you know, like you say, reduces chaos. It allows people to thrive and, and to do the right work the right way and, and, and to be more creative.

Mark Graban (20m 41s):
And I, and I think, I think that's a really important point that you make.

Rich Sheridan (20m 45s):
Yeah. I mean, it's like a road, you know, you know, we get in our cars, we all have our own independent mission where we're going. And yes, there are lines, there are, there are speed limits. There are stop, stop lights and stop signs. There are rules of the road, there's behaviors of who's on which side of the road moving in which direction. And we all get to get to where we're going in, in relatively efficient and effective manner because the structure is well understood by everyone. And that's what humans crave. That's where we thrive. Because if we can pull enough fear out, you know, it has a physiological effect on the human body. We can, we can now, you know, not operate out of a amygdala and reptile brain and fight or flight mode.

Rich Sheridan (21m 28s):
We can actually operate out of the part of the brain that makes us the most human, where the greatest creativity and imagination is gonna come from. And, and that's, you know, and, and a lot of people think, oh, that's what you, that's how you attract young people. Heck, we attract young people, old people. This, this doesn't differentiate by generation. This is what people want in their workplace.

Mark Graban (21m 51s):
So I wanna delve a little bit more into the idea of eliminating fear. This is something Dr. Deming also talked about, and there was a phrase you use of manufactured fear. Can you talk about what that is, why it's harmful and, and how you can get rid of it?

Rich Sheridan (22m 6s):
Yep. You know, in, in my early managerial days when I learned how to manage others by popping out of my sort of managerial little eggshell and I, I did the duck thing, right? I mimicked whoever I saw first. Cause that's the way I learned to manage in the early days. I was taught I should go around to my team and poke my head in at random times and say, Hey, how's it going? Hey, what you working on? Hey, are you almost done? Hey, are you staying this weekend? You know, just those simple questions create fear in your team. Well, why doesn't he know what I'm working on? Well, do I have to stay this weekend? Is it, is that how I get ahead here?

Rich Sheridan (22m 47s):
And suddenly our minds are consumed with all the wrong thoughts. I, I now refer to that as management by walking around and annoying people. Yeah. But we, we eliminated that. We, we put the work plans up on the wall for all to see. It's clear, it's straightforward, it's unambiguous, it's also sustainable. I think this is another big part of our culture that people are fascinated by. We've created a system that if we need to get more done, we can actually increase the team size to produce more output. The effect of that is that in 12 years, I think we can make a claim. No other business in our industry could ever claim. And that is, we work 40 hour work weeks.

Rich Sheridan (23m 29s):
We never work weekends. We've never had a deny vacation request. Why? Because we've structured the work such that if we need to get more done and hit a deadline, cuz all of our clients are external to our company, they might care a little bit about our culture, but they care about their deadlines and their budgets more. But if we need to hit a deadline, we can add more people in to get more done. And that's, that's magical because now we get a humanly sustainable pace. Because one other thing that creates manufactured fear is when a boss goes around says, so you're staying this weekend, right?

Mark Graban (24m 3s):
That's not really a question, right?

Rich Sheridan (24m 6s):
Yeah. Well it is and it isn't. Right. You know, there's an implication question, right? Of course you are. You wanna get heavier, right? You, you know, that's expected of you, don't you? And it's even an unstated fear. And then when your peers start showing up, now you feel that other fear of the wrong kind of peer pressure where wealth, they're coming on Saturday and I'm not here. I'm gonna be conspicuous in my absence. And so all of a sudden you're, you're almost operating in fear now 24 hours a day because all you're thinking about is, you know, what's the FaceTime I can put in to make sure that, that I'm not letting anybody down. That I'm, that I'm, that I'm there even if I'm tired, even if I've got something more important going on in my personal life, which could be, you know, taking care of a loved one or just being at your kid's birthday party or taking the needed vacation because you earned it.

Rich Sheridan (24m 55s):
And, and it's a way to rejuvenate. We have another weird rule here is when you go on vacation, you can't check email when you're way on vacation. And it's crazy, right? Most people look at me like, you're kidding, right? You know, that's all I do on vacation is sit on the beach with my laptop. I'm like, yeah. What message are you sending your kids when you do that?

Mark Graban (25m 13s):
Do, do you, I mean, do, does somebody actually double check that, that you've disabled the mail account on your iPhone? So it doesn't,

Rich Sheridan (25m 20s):
No, but we, we had a great story happen when one of our team members took off on a, a few week vacation to visit her in-laws with her husband in Hong Kong. And she, she was clearly, she was project manager and she was checking in on some emails and responded to them. And later when she came back we said, Hey Lisa, you know, actually we probably wrote her an email right then and there said, Hey look, you're on vacation. Just enjoy your, just enjoy your vacation. Right? And you know, and of course she was trying to be the diligent project manager cuz they like to keep track of things. But when she came back, we made a story out of it. We made a story of Lisa's checking of email was while she was on vacation.

Rich Sheridan (25m 60s):
Now it was lighthearted, right? I think it annoys her every now and then we bring it up the next time she took a vacation, it was actually a seven week holiday that she'd saved up her time for, she went to Australia, New Zealand and back to Hong Kong and South Korea and she declared at one of our daily standup meetings. By the way, I will not be checking email while I'm on vacation cuz I don't wanna hear anymore stories about this. Well, simply through telling and retelling those stories, we don't have to check. Yeah. People get it. They understand that that's the norm here. It's not, the opposite is not the expectation.

Mark Graban (26m 36s):
Well, final question. I mean, looking ahead, I mean, what would you see as being the biggest risks, the things that would potentially destroy or dismantle, you know, the culture of, of joy at Menlo Innovations, let's say, you know, if, what what, I mean what, what, what are the types of things that could lead to some stumbles? What what are you afraid of in terms of not being able to sustain that culture?

Rich Sheridan (27m 3s):
Yep. I, I think for us, and I think this is true of any organization, is once you choose a cultural intention and you, and you get it working, which we have the risks to men are the same as the risks to any other organization. If you, if you let up, if you, if you stop focusing on that, if you, if you change your hiring practices that such that you're not testing for culture first like we do today. That's our first interviewing fit as a fit for culture. You know, I think in any organization, large or small, it doesn't take too many drops of poison in the pond before the whole culture is ruined. And, and in a cultural focused organization, those drops of poison are gonna come from the people.

Rich Sheridan (27m 48s):
They're gonna come from the leadership. They're gonna come from the, the, the, the, the top level leaders and founders and visionary leaders, the organization, the on the floor leaders. Or they can come from the people on the team who just have the kind of powerful personality that says, to hell with all of you, I'm, I'm gonna do this the way I'm gonna do it. And if, if you don't have the, the guts to take those people and sit 'em down and say, Hey, look, either you come to grips with what we're doing to maintain and extend our culture, or I will work with you to find you a good job somewhere else in the community that's a better fit for who you are as a person.

Rich Sheridan (28m 32s):
And that's, you know, that's gonna be universal throughout our history as we have to not focus on, on, on business results, even if it destroys our culture.

Mark Graban (28m 46s):
Well, I, you know, there's, there's so much more that we could delve into. I guess I'm gonna leave it to the readers, to, or listeners to become readers and, and grab the book, Joy, Inc. How we Built a Workplace People Love. Rich, thank you so much for, for writing the book and thank you for being a guest here on the podcast today.

Rich Sheridan (29m 6s):
I really appreciate the opportunity to talk with you today.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.



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