Interview with Mark DeLuzio on How to Turn Waste Into Wealth With Lean

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This episode is sponsored by StoreSMART.

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My guest for episode #255 is Mark DeLuzio, author of the recently released book Turn Waste into Wealth: How to Find Cash in Every Corner of the Company. It's Mark's first book, but he's been well-known in the Lean community for a long time.

Mark started learning and practicing Lean in 1988 when he worked for Jake Brake, a Danaher company (and Danaher has long been considered a great Lean company). As his bio says, “After studying TPS under Taiichi Ohno's influential Autonomous Study Group, he was instrumental in developing Jake's first zero-defect line for Toyota's Hino Motors. He has spent considerable time in Japan implementing TPS at various world-class companies and has had a successful career in finance.”

He is also the CEO of the consulting firm Lean Horizons.


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For a link to this episode, refer people to www.leanblog.org/255.

  • His book's website
  • How Mark got introduced to Lean, working with George Koenigsaecker and Art Byrne
  • Study missions to Japan (six times) with Nakao and Iwata from Shingujisu
  • Doing the first ever “3P?”
  • The Danaher story and the Danaher Business System
  • He writes, “Lean is adopted at the top, but driven by the bottom” – what does he mean?
  • Why can't you delegate a Lean transformation?
  • How do you deal with “Lean naysayers?”
  • Why does “Lean Trump Six Sigma?”
  • Advice for hospitals that are just getting started with Lean?

For earlier episodes of my podcast, visit the main Podcast page, which includes information on how to subscribe via RSS, through Android appsor via Apple Podcasts.  You can also subscribe and listen via Stitcher.

Thanks for listening!

Automated Transcript

Mark Graban 

00:00:00

This episode is again, sponsored by StoreSmart, an American manufacturer of products to support your lean journey, including huddles and visual display boards. They sell A3 document holders, status magnets, and other products for 5S, Kanban, and more. Visit their website at www.storesmart.com/leanblog.

Announcer 

00:00:23

Welcome to the lean blog podcast. Visit our website www.leanblog.org. Now here's your host, Mark Graban.

Mark Graban 

00:00:33

Hi, this is Mark Graban. Welcome to episode 255 of the podcast for June 29th, 2016. My guest today is Mark DeLuzio . He is author of the recently released book titled turn waste into wealth, how to find cash in every corner of the company. Now it's Mark's first book, but he has been well-known in the lean community for a long time. Mark started learning and practicing lean in 1988 when he worked for Jake Brake, Danaher company, and Danaher has long been considered a great lean company. As his bio says, after studying TPS, gender Taiichi Ohno was influential autonomous study group.

Mark Graban 

00:01:14

He was instrumental in developing Jake Brake's first zero defect line for Toyota's Hino Motors. He has spent considerable time in Japan, implementing TPS at various world-class companies and has had a successful career in finance in 2007. Mark was inducted into the Shingo Academy for his contribution to the lean movement, and he is also the CEO of the consulting firm Lean Horizons. So if you want to find a link to Mark's bio his website information about the book, you can go to leanblog.org/255. Mark. Hi, thanks for being a guest on the podcast today.

Mark DeLuzio 

00:01:55

Thanks for having me, Mark.

Mark Graban 

00:01:57

Can you start off by introducing yourself to the audience, you know, talk about your career and how you first got introduced to lean or the Toyota production system?

Mark DeLuzio 

00:02:06

Well, that's going back a long time ago. I don't think I can remember that far back, but well, actually I, my lean career started in 1988, George Koenigsaecker and Art Byrne hired me at a company called Jake Brake, which was a part of a company called Danaher. And we started Jake Brake was in dire straits. I started as a finance guy there and they specifically wanted me to come in and do this thing called lean accounting, which I had no idea what it was at the time, but they provided all the resources. I went to one of the first study missions to Japan to study the Toyota Production System.

Mark DeLuzio 

00:02:47

I ended up doing that over my career. Six times NDN was mentored by Nakao and he was from Shingijutsu. He spent a lot of time with those guys and had started to learn that the accounting systems that we traditionally use and what they taught you in college were really driving dysfunctional behaviors when it came to lane, you know, because like absorption costing and purchase price variance and things like that. So, so I was really involved with driving that part of the business, but in the meantime, got involved in a lot of Kaizen activity and I really got the bug and really loved it.

Mark DeLuzio 

00:03:28

So I was promoted to CFO, put the first lean accounting system in, in 1989. And shortly after that, I said, geez, you know, finance is great. And I did really well in this career, had my CMA and my degrees and all that, but I really want to get involved in operations. And I really want to get involved in this thing that wasn't called lean back then. Right. But, but anyway, got involved in that and became general manager of the Asian business for Jake Brake and had a comp a customer called Hino Motors, which was owned by Toyota and not only learned from just but learned from Hino Motors as well, which was a real advantage for me. We did the first 3P implementation, I believe, in the country.

Mark DeLuzio 

00:04:12

There may have been one before that, but I think we were one of the first ones and ended up getting my MBA in operations management. Got my CPIM, which back then APICS was just teaching everyone at JIT was throw all your inventory back to the supplier. That's what JIT was all about way back then. And they've evolved since then. And then what happened in shortly after that George Sherman, our new CEO came on board and asked me to work for him directly to do what we did a Jake Brake. Cause we made a lot of great improvements in the first couple of years. That's been just, he basically said, Hey, I want to do what you guys did at Jake Brake corporate wide. And that really gave birth to a wall at the time we called it the Danaher production system.

Mark DeLuzio 

00:04:57

And shortly after that, I changed it to what's called the Danaher Business System because it was really more of an enterprise approach. Mark. It wasn't, it wasn't just, it wasn't just a production system if you will. But it was really more of an enterprise business system. So I worked nine years for George Sherman in the Danaher Business System office, evolving that process over the course of time.

Mark Graban 

00:05:20

Yeah. I'd like to talk more about Danaher, but maybe backing up a little bit, you know, some of our listeners might not really know about Shingo Jitsu, even though, I mean, they were amongst the first to bring lean to the US like you said before, the term lean had really been coined doing Kaizen blitz and Kaizen events. Can you talk a little bit about, you know, the role they've played in bringing lean to the U S and your involvement with them?

Mark DeLuzio 

00:05:45

Yeah, exactly. Well, what happened was George Sherman and I mean, I'm sure George Koenigsaecker and Bob Petland went to a seminar at the Hartford. What was it called back then? It was now, it's now the rent and rent a rental a university, and heard this talk by Iwata. And George convinced them to come back to Jake Brake that night and do a Kaizen. They were actually moving machines around at 12 midnight. And the first Kaizen in the US was really performed right here in Bloomfield, Connecticut at Jake Brake. And what happened was they convinced him them to, to come to Jake Brake.

Mark DeLuzio 

00:06:28

They didn't want to at first cause we were so awful and they basically said, you guys are a bunch of concrete heads and you're never gonna learn. And, but we ended up bringing Shingijutsu back and had a very good relationship with them. And I brought them through all the Danaher companies as well when I got into the DBS office. And these guys were the original guys that we worked with, the original five guys were the disciples of Taiichi Ohno, who basically were the creators of the Toyota Production System. So we learned from the source. Yeah, it's interesting today when a lot of consultants say, no, that's not how you do standard work.

Mark DeLuzio 

00:07:10

And well, we kind of learned from the guys that wrote it, you know, and, and, you know, you may have a different way of doing it, but this is how we were taught, you know? So, so anyway, they provided a tremendous amount of benefit and really formed the foundation of what later became the Danaher Business System.

Mark Graban 

00:07:33

Yeah. So, you know, Danaher is a really fascinating story. You know, one of the major business magazines a few years ago, did a piece about, you know, Danaher being the best company nobody's really ever heard of. Can you tell a little bit of a story about the Danaher Business System, you know, their, their model for, you know, using lean for business success?

Mark DeLuzio 

00:07:55

Well, one of the most important things mark to think about when you're doing lean is to think about how your resources and your efforts are going to be aligned to what we call breakthrough objectives and breakthrough objectives come resonate out of your strategy. And what you're really looking to do is to drive improvements in safety, quality delivery, cost, and growth and drive performance that gets baked into eventually daily management systems, because you're focusing in on process, right? And when you focus in on process, it just becomes a way of doing business, but at a very high level.

Mark DeLuzio 

00:08:39

So, so the real game with what we learned at Danaher was not only what to focus on, but what not to focus on that was a real key. And that's what we learned out of the treasury deployment process. And a lot of people confuse that process with, with daily management and trying to do Bunsen singles, where strategy deployment is really home runs and grand slams. And those are the things that you really trying to do for where do you want to institutionalize those changes? So that that's the level you perform it at a consistent basis. One of the things that Dan or her got rewarded for from a multiple perspective is that analysts would say they're predictable.

Mark DeLuzio 

00:09:20

They're, they're reliable and they're consistent. And they always hit their numbers. And a lot of that, I believe ties back to the foundation of the strategy deployment process. Larry Culp the former CEO, Tom Joyce is now the CEO of Danaher used to say that strategy deployment was really the mortar between the bricks and that held everything together. And the, and that note, that was a real key breakthrough that we put into the Danaher Business System that really set the table for all the other things we did in lean. Yeah. So,

Mark Graban 

00:09:58

Well, and that's, I think a really important point tying things to objectives, goals, and strategy. I'm sure you've seen this, you know, you touched on this in the book that lean is not just a bunch of tools. And, and I think we've all seen organizations get off track where they, they learn lean tools and they say, we're going to go implement lean tools. And then they learn that maybe they just have some random improvement. It's not really having an impact. People get discouraged with lean. I think we, we, we need to avoid that, especially in healthcare considering how high the stakes are. I mean, what can you kind of make, I'm curious what your thoughts are on that.

Mark DeLuzio 

00:10:34

Yeah, well, you know, it's a really good point mark, because, you know, you think about, I just posted a new house a couple of years ago, and this house, the quality of this house is so much better than what I came from, but both houses were built with the same tools. So interestingly, what's really the difference. The difference is people. And a lot of people, especially engineers today, think that lean is more of a, a formula, an algorithm, you get the right tools in place and everything's gonna be fine, but you kinda, you got to implement those tools around people and with people. So, so, you know, Mike builder, I would say to my builder, you know, George, geez, you know, that's fine.

Mark DeLuzio 

00:11:16

Leave it alone. He'd say, Mark, it's not good enough for me. I'm going to fix it. Even though I told him it was okay, that's the attitude towards quality, the attitude towards excellence that made this house so much of a better house than what I came from. So that's really what this is all about at the end of the day. It's about people and driving it from that respect.

Mark Graban 

00:11:35

Oh, you know, when you talk about people in, in the book, you know, there's a lot of, you know, it's real, a lot of digestible, short chapters and, and key points in here. One thing that's stood out to me, you're talking about lean is adopted at the top, but driven by the bottom. So when we talk about people and people at different levels of the organization, what do you mean by that statement?

Mark DeLuzio 

00:11:58

Well, there are different roles for different layers in the organization. And you know, one of the things we, we can we focus on is this whole concept called muda, which is Japanese for waste. And then you get your seven traditional waste. And of course, everybody has that eighth ways of unused creativity as the eighth waste, but there are two other forms of waste mirror and mirror, you know, unreasonableness and unevenness that are typically caused by policy and they're caused by leadership. So let me give you an example. I have a client who has a sales department that cooks in what they call the president's club and the president's club drives hockey stick type demand for give quarter-end discounts to their customers.

Mark DeLuzio 

00:12:50

The customers get trained, these policies drive quarter in demand for their product. However, the plants are trying to do level loading consistent with lean thinking. So there's two things that are going on. Now, if the CEO doesn't understand those behaviors in the, in the dysfunctionality that is created, they're never going to optimize themselves as a true lean enterprise. So what ends up happening mark is the first couple of years, everybody focuses in on tools and that's fine. And you don't really need a lot of leadership involvement at the beginning because there's so much, low-hanging fruit. Everybody's really euphoric about the, the improvements that get made, but then they hit a wall and I'm starting to build my business around companies who, what I call flat mind, which I think is going to be the name of my next book.

Mark DeLuzio 

00:13:43

And why do companies flat line and many times it's because companies are trying to opt in and understand mirror and Mary, and they're trying to optimize functions as opposed to optimizing the enterprise. And so, and, and, and it all starts with leadership at the end of the day, leadership isn't engaged. They say they're committed. Those are words I like to see leadership involved leadership has to be involved, physically involved, learning, educating participated in Kaiser teams, participating in a report outs, asked them, learning how to ask the right questions.

Mark DeLuzio 

00:14:22

And so you kind of gravitate from the tools perspective to a more system wide approach. You know, the, the whole movement from MRP to true single point scheduling and pulse systems takes, you have to harness the energy of the whole organization to be able to do that. You can't just do it in a simple Kaizen when you put in a cell and it's constrained, and it's only a few people involved. This is an enterprise wide approach. And if you don't have the understanding of the CFO, the CEO, the COO, it's never going to happen. And that's why a lot of companies end up flat lining over time because they never are able to break through that barrier.

Mark DeLuzio 

00:15:04

And it all has to do at the end of the day with leadership.

Mark Graban 

00:15:08

So maybe let's talk about that a little bit more, because I think there's a fairly common problem in healthcare where executives will say they support lean, but they're not involved the way you were describing. You know, they, I think a lot of times executives think thing and somehow delegate the lean transformation. So well, I've hired a director of lean. What, what would you say to executives that are trying to go down that path? What else would you say to them?

Mark DeLuzio 

00:15:34

Well, you can't delegate. What are your responsibilities? You know, at the end of the day, the leader leadership has a specific role to play and to say, Charlie's my lean guy. He's going to implement lean right there. You know, they've got the leader, doesn't get it. And, and so you can't, you can't really, you can't really do that. We need leadership to break down the barriers to be able to do the system-wide things that have to happen in the organization, you know, when it comes to healthcare. You know, I think, I think there's some interesting dynamics that go on in that business. But one of the things in one of the questions I think you want to ask is, is, you know what, what's some advice for hospitals and healthcare.

Mark DeLuzio 

00:16:19

The first thing I think they have to do is stop thinking that they're so unique that these, that these approaches won't, won't apply, let's argue, let's agree that they're different, but every company is different. Every company has a different culture. I'm working with a university right now and they think they're different and they are different, but it doesn't mean that doesn't work. Okay. So I think the other thing is in healthcare and you, you probably seen this more than I have this whole idea of craftsmanship and every doctor and every practitioner has their own unique, artistic way of doing something has to be thought through from the respect that, you know, that leads to non standardization and quality problems that, and healthcare quality problems lead to death.

Mark DeLuzio 

00:17:16

So, so I think we've got to start thinking about the paradox with the Toyota production system, where the more standardization that you have, the more flexibility you have in your organization, and that's kind of counterintuitive, but that's exactly what I think healthcare needs is more standardization and, and getting away from doctor a, does it this way, Dr. B likes the operating room set up this way. There is one best way. And, and we all have to agree with that. The best way is

Mark Graban 

00:17:49

Think there's, there's a, it's interesting in healthcare, there there's a balance to be found because, you know, if you have this discussion and it's more effective when it's doctors or surgeons leading the discussion to say, you know, what are the evidence-based best practices? They'll use that term. Evidence-based in health care. So looking at well, what are the outcomes? And if a doctor says, well, I'd like to do it this way. Well, is that, is that a compelling reason? Or, you know, and when you think about the patient and outcomes, and I think sometimes we have to challenge people there. There's, you know, I think there's times where a surgeon a was trained in method a and surgeon B was trained in, in method B and relearning that other method could be really time-consuming and might not have a big impact on outcomes.

Mark Graban 

00:18:39

But yeah, I mean, th there's, there's huge opportunities though. There there's certainly many, many cases where waste and defects and harm is caused by lack of standardization or people just not following what they've already defined to be the standard process.

Mark DeLuzio 

00:18:55

Yeah. Not adherent to standards at all. It is another and other defect mode, you know, and I'm going to see that the hospitals are embracing triple aim, you know, which basically for people who don't know is, you know, patient experience, population health and cost of healthcare, but I'm not convinced yet that health facilities know how to deploy specific objectives and use lean to achieve those objectives around those three areas. So I think that we're making some progress, but from personal experience, I can tell you, triple aim is not happening. So, but maybe that's just my unique, personal experience better.

Mark DeLuzio 

00:19:37

I think he's getting better.

Mark Graban 

00:19:38

It's getting better.

Mark DeLuzio 

00:19:39

Yep.

Mark Graban 

00:19:39

You're right. It's not enough to just have goals. And, you know, we, there's gotta be that connection of action and strategies to actually try to close the gaps in those goals. And, you know, some, some folks in the IHI and Don borrow working out, talking about the quadruple aim, this idea of creating better workplaces, more engaging workplaces, which, you know, to me, ties back to the idea of respect for people. You, you touch on this in the book, you know, the I, to me, I think, you know, part of the idea is if you create a better workplace, you engage people, you get them participating that helps accomplish the original parts of the triple aim.

Mark Graban 

00:20:21

Curious what your thoughts are on, on any of that, or the idea in general of respect for people.

Mark DeLuzio 

00:20:26

Well, you know, I think first of all, I don't think respect for people needs to be a big mystery. I think we all know when we're respected by other people and when we're not. And I think we also know when we disrespect people ourselves and when we don't, but so I don't think it's a big mystery. I think there's a lot of writing about it and there's a lot of university professors writing about it and all that. But, you know, I think, I think it's pretty basic when you come right down to it. I think creating a blameless environment, you know, focusing in on the process as a foe, as, as opposed to who did it, but what went wrong with this process? I was at a client and then we were going through a strategy deployment review and they showed a Pareto chart of manufacturing errors.

Mark DeLuzio 

00:21:13

And their biggest bar on the Pareto chart was operator error. And I said, I stopped them. And I said, timeout. I said, that is not a cause operator error. I said, I want you to change it to management error because you did not provide a process to, for that employee to be successful. So you got to think about it from not blaming the operators, but Raymond management to say, we didn't ensure that we had the right processes in place. You know, we spent for people, I had a, I had a client mark where 80 people waited 20 minutes for the CEO to come in and give a kickoff speech. He was late, he had 80 people, high paid people, by the way, I won't mention the company, but high paid people.

Mark DeLuzio 

00:22:00

And that was just disrespectful. And then he stood up there and said, I'm really supporting you guys. I'm looking for great results at the end of the week. And when I come back on Friday, I can't wait to see what you've done. So he came back on Friday and guess what? He was 20 minutes late again. And that, and people had to catch flights. They were, you know, they were late and all the whole thing. So, so, and he came back and, you know, I want to see what you guys have done during the week. Nothing never showed up to report out, never got involved. You know? So that's just disrespectful. You know, when you talk about, when you talk about naysayers mark, and I know that was one of your thoughts on, on this, you know, I seen many times, and I'm sure you have to wear a naysayer is basically turns around, does a 180 and, and is the biggest supporter, right?

Mark DeLuzio 

00:22:58

Going forward. I've seen that happen time and time again, I've also seen situations where naysayers don't do Hills and, and didn't move. And so those, those, those particular instances are tough. My, my approach, there is a look, provide the resources, provide the training, provide the support. But you know, a lot of people get rewarded by putting out fires all their career. They were the firefighter. And now lean is saying, we're not going to be word firefighters. We're going to reward people who have processes, and we're going to reward the smoky, the barriers that prevent forest fires. And that's what we're going to reward.

Mark DeLuzio 

00:23:39

And sometimes it doesn't work for them. And sometimes they fight you and all that. So over a period of time, and this ties back into respect for people over a period of time, if those naysayers don't change, they've got to exit the organization. I hate to say it. They've got to exit the organization. Also there, there are cancer, and they'll bring you down. You'll spend more time managing the 10% naysayers than he was at 90% that are on board. And if you allow a naysayer as a leader to, to exist and thrive in an organization that is disrespectful for the 90% who are trying to do the right thing. So, so that that's been my experience with naysayers and it ties back into the whole respect for people concept.

Mark Graban 

00:24:25

Is it? Yeah. Cause you're right. I mean, we need to have respect for the customers or patients respect for those who are trying to do things a new way. I mean, where where's the, the, imagine there's some judgment involved of how long do you try to bring somebody along versus when do you reach a conclusion that they need to move on? Yeah.

Mark DeLuzio 

00:24:44

It's different mark for every individual because, you know, if you start seeing people make progress, you know, and, and, and you really gotta look at not what they say, but what they do. And the concept time where you just know Charlie's not going to change, or you start seeing progress with Mary and Mary is starting to get it, you know, and she starts having some success. So you can see that you could work with her and she'll, she'll be on the road to, to start a med if you will. And, but, you know, I think it's more of an intuitive feel as to an, a judgment as to there's no, there's no formula that says six months, three months, you know, that, that's how I look at it.

Mark Graban 

00:25:27

Yeah. I'd like to go back to what you were talking about around a blameless environment in healthcare. You know, there, there's a phrase that gets used that sort of describes the old culture of naming, blaming and shaming. And, you know, that's not an approach that leads to quality improvement. That that's an approach that leads people to, to hide problems instead of admitting that we have problems. And I think that that's just, that's a huge mindset change. It's, it's tough for leaders. I think it's still pretty rare in healthcare for people to really, to really embrace that idea. I heard a former Toyota guy say a couple of weeks ago at a conference, almost exactly what you said, that it's, management's responsibility to provide people with the system and processes that can be successful.

Mark Graban 

00:26:16

Where I think the norm in healthcare far too often is I hate to say it abdicating that responsibility and then just blaming and punishing people when they inevitably make an error, really it's really tough to change, but it was when,

Mark DeLuzio 

00:26:30

You know, it's interesting because a lot of companies, big companies in particular, they have this whole talk rating approach. Okay. Where do they want A-players? And Toyota has a little bit different view of that. They basically say that, you know, Toyota gets brilliant results from ordinary people working in brilliant processes. Okay. And so when you look at that, you say, geez, you know, not everybody needs to be in a plant. As a matter of fact, I don't think you want everybody to be an, a player. So the whole top grading concept, I know there's a book written and Jack Welch was a big fan of it, but way back when I disagreed with, because I don't think you need all a players.

Mark DeLuzio 

00:27:16

As a matter of fact, I have a client right now who has all eight players, and there are a bunch of individual contributors. There's no teamwork. And they spend most of their time managing their careers and managing their boss, then managing the processes that they're in charge of. So, so you really gotta, you really gotta look at this and say, you know, how do we create brilliant processes that are going to provide brilliant results that are, that are simple enough, that can be run by ordinary people. And by the way, those ordinary people are your people who, who are going to help you create those processes. You got to get them involved and get their ideas because they know the job better than anybody.

Mark DeLuzio 

00:28:01

So, so, you know, when you look at, when you look at this, this whole blameless environment perspective is, is, is important, but it's so easy to blame an individual. Now, if you've got a good process and somebody somebody's not following standard procedure, that's a disciplinary issue. But I think those are going to be far. And few, if you have good processes that will prevent people from making mistakes. I remember going to Hino motors and I went to their connecting rod cell. And I spent a whole day there with my engineers. And I said to the engineer who was showing us, showing us around. I said to him, where do you put your scrap?

Mark DeLuzio 

00:28:44

He said, he said to me, the Lucio son, we don't make scrap in their stuff. Okay. So, and it was like, whoa, okay. You know, and, and every machine mark was pokey, oat and judoka, and every, you know, you name it. You almost had a want to sabotage it to make a mistake.

Mark Graban 

00:29:06

Well, you're, you're, you're bringing me back to my roots. 20 years ago, I was an industrial engineer supporting a connecting rod machining cell at general motors. And they made lots of scrap and management could have yet. I mean, their approach would have been, and this is pre any sort of lean culture. They would just yell and scream and blame the employees. And if you just looked at the equipment and how it had been run to death over time, that I think that's, you know, back to your point about overburden than that, that was a management policy to treat the equipment. That way it wasn't the worker's fault, but yet, you know, they, they would get blamed sort of, unfortunately the same way people get blamed in healthcare.

Mark DeLuzio 

00:29:45

You know, you remind me, you remind me of a funny story. You know, this, this cell that I'm talking about over in Japan, the youngest piece of equipment was 10 years old. And, you know, and everybody had all the engineers like to think about new fancy equipment with all the bells and whistles and everything else. And they're like the bias solution as opposed to invent a solution. And I'll never forget the time. This is a little bit off subject, but I'll never forget the time when I was with Mr. Nicko from chinky Jitsu, and an engineer came up to him and said, , we need a new machine. Then the cost said, why do you need a new machine? And the teacher said, because it's old.

Mark DeLuzio 

00:30:25

I said, how old is it? And he said, it's 15 years old. And the college shook his head. And he says, he looked at the engineering, says, how old are you? And the engineer said, I'm 32. He goes, it looks like we need a new engineer as well. So just because it's old doesn't mean it's a

Mark Graban 

00:30:46

Yeah, yeah, yeah. But you know, that equipment is managed differently and taken care of and not run to death. Yeah. These are, these are management issues. Yeah.

Mark DeLuzio 

00:30:55

Yep.

Mark Graban 

00:30:57

Yep. So, I mean, one of my lessons learned from general motors is that, you know, when we did get a new plant manager who had been one of the original GM people at Numi, you know, learning from Toyota in California, you know, he came in and set a totally different tone. I mean, I, I saw the impact that that one leader could have, you know, to, to help change the culture, to improve the performance of the 800 people who worked there, you know, that, that, that role of, of leadership can't be understated, you know, lean isn't just about training and fixing the employees. Right.

Mark DeLuzio 

00:31:35

Exactly. Exactly. Yeah. Again, it's all about the process, you know, and really focusing the problem, solving on the process. When you have a problem, what went wrong with the process? Now, again, you could have somebody that had a standard that, that didn't follow the standard, but then you've got to ask yourself why didn't they follow the standard? Okay. Because many times when an employee doesn't follow a standard, there's a darn good reason why. Okay. And you really have to get under the Congress instead of just disciplining the employee and saying, well, why didn't you follow the standard? You really have to say, why didn't he follow the standard?

Mark DeLuzio 

00:32:15

You have to ask yourself that question. Okay. Because, because there's usually something wrong with the process that needs to be improved, that the employee is trying to do a work around or something. Okay. Or it doesn't maybe see the value in the process step or whatever. So, so, you know, every problem leads to the next level of improvement. And if you just chalk it up, that the employee did the wrong thing, and that could be the case, don't get me wrong. But you know, many times there's more re a deeper meaning behind why the employee didn't follow the process.

Mark Graban 

00:32:49

Yeah. And, and I think that's a key element of respect for people is understanding If there's a legitimate barrier to doing things, the right thing, you need to eliminate those barriers and not just blame the employee.

Mark DeLuzio 

00:33:04

Exactly.

Mark Graban 

00:33:04

One of the element of leadership I was hoping we touched on. Cause you make this point very well in the book. I think this is a really important point for healthcare leaders because the norm in healthcare has been to focus on cost cutting. And often that means layoffs. Can you help make the case for why lean can't be? Shouldn't be used to drive layoffs?

Mark DeLuzio 

00:33:26

Well, you know, I've got a chapter in the book that says lean does not equal less employees are needed now. Right. And you know, here, it's very simple. It's very simple. I mean, you're asking employees to get involved in improvements and improving their own jobs, their own work. They're your best consultants at the end of the day. And they make improvements. They make efficiency, gains productivity gains and all that. And instead of 15 people, now you only need seven. So what happens to the other eight? Oh, we don't need you anymore. You go to the next group and say, okay, now we want your input. You, are you going to get it? I don't think so. Okay. They're going to sabotage you. They're going to work behind the scenes.

Mark DeLuzio 

00:34:06

They're going to work harder on making things break machines. All of a sudden, I'm going to start breaking down and you won't know why, and you'll create a whole level of distrust and the whole lean continuous improvement approach and culture that you're trying to create is going to be replaced by a lot of defensiveness and a lot of looking over your shoulder and making sure that there's a self sustaining security for yourself. And the lasting people are gonna want to do is create improvements and suggestions to improve the work. So, so, you know, it's just counter intuitive to, or counter to the whole philosophy that you want to develop in a lean culture.

Mark DeLuzio 

00:34:54

And so people who use lean as a head cutting tool is don't understand the fundamentals. See the real responsibility. Mark is for management to grow the business and consume those, those additional resources or put those resources to work in improving the business on Kaizen teams and things like that. But ultimately, you know, it kind of feeds into itself if you do it right, because your quality is going to get better. Your lead time and delivery is going to get better. Your costs are going to get better, and you should be able to use that as a competitive weapon in the marketplace to grow your business.

Mark DeLuzio 

00:35:35

Right. So if you do that, then those excess resources are going to be employed in the growth of the business and you won't have to lay them off. So, you know, now I'm not saying that there's not economic tour, moral out there where you can have to make some cross cutting moves. Okay. I think you got to reserve the right to do that. But you know, when the, when the, when the 2008 recession happened, I think that that, that happened, you know, unfortunately, but using lean as a means to reduce heads is totally wrong. And quite frankly, I refuse to work with companies who have the mentality.

Mark Graban  

00:36:15

Yeah. Yeah. Well, good. And any, you know, there's a difference between, let's say if there's some huge structural shift where, you know, 50% of a company's demand has gone away forever versus we've improved productivity by 20% in an area. I mean, those are different circumstances.

Mark DeLuzio 

00:36:34

Exactly, exactly.

Mark Graban 

00:36:35

And then it sounds like you would make the case that, you know, if demand instantaneously and permanently went away, that maybe that was management's fault for not anticipating that or not preventing that.

Mark DeLuzio 

00:36:50

Well, you know, I would, I would, again, look at their marketing processes and try to understand how they didn't see that and how they, you know, again, I, what I believe the market here,

Mark Graban 

00:37:04

That's not really the right word,

Mark DeLuzio 

00:37:06

But yeah. You know, I, I w I w I would say, you know, what was wrong with our forecasting process and our understanding of the marketplace where we didn't anticipate it, number one, and two also reinvent ourselves for another sector of the business to be able to continue and employ people and, you know, do all the things we need to do as a business. Yeah.

Mark Graban 

00:37:31

Because I mean, how healthcare has, I think some risk, if, you know, if you're running a hospital and your business model is based around performing surgery and having patients in beds, there's been such a push and, and a lot of dimensions to keep people healthy, to keep them out of the hospital. And if we're, if have health care more broadly is really successful in those goals, there there's, there's a real financial risk to hospitals. Interesting challenge.

Mark DeLuzio 

00:38:00

Yeah. It's an interesting challenge. But I think at the end of the day, it's a noble goal. You know, the, the, the triple aim and in population health and, and things like that. And I think that's measurable and I think that's actionable. I think what's happened in healthcare though, as baby boomers, like me are getting older, the massive people that are going to be coming through their doors is just going to increase, you know, so they got to become, they've gotta become more efficient, even if, even if the ratios of disease is down, they're still gonna probably see an increase in demand only because of the pure population.

Mark DeLuzio 

00:38:39

And so, so I, I think, I think that they've got to get ready for that surge. And I'm on the board of directors for a company called Hillenbrand, which one of our companies is Batesville Casket. And, you know, we track death rates and flu rates and flu seasons and things like that. It's kinda kind of morbid, but, but, but you know, right now the, the market, the market is such that cremations because of the economy where people are doing cremations, the death rate is done, but that's going to change over the next 15, 20 years as our baby boomers get older.

Mark DeLuzio 

00:39:19

So, so, you know, I think that's something you got to look at. Yeah. Well, we've got to wrap up here in a couple of minutes. I, I wish I had left more time to delve into a topic. Maybe I can, at some point, maybe we can do, we could do a whole 30 minute podcast on this topic. If a chapter titled lean trumps Six Sigma, and you, you posted a question on LinkedIn, all I'll link to that in the show notes about lean Sigma and why that causes a lot of confusion. What's kind of a quick synopsis of what you posted there on LinkedIn. Well, really, really quick, Mark, you know, problem solving as a subset of lane, right?

Mark DeLuzio 

00:39:58

And Six Sigma is a statistical problem solving methodology that has a bunch of tools in it, right? And some of them crossover, I think it's foolhardy for companies. And a lot of companies have done this to create a culture and a management philosophy around the tool. And, and that's what Six Sigma is where lean is more of a philosophy and a methodology and more suitable to developing a culture. It's a way of thinking as opposed to a set of statistical tools to build a culture around one of the things I think that you have a problem with with Six Sigma, is it, it, it's not what, you know, I'll get back to a toilet, gets brilliant results with ordinary people, running brilliant processes, not everybody is sophisticated enough and you need an incredible amount of training to be effective with Six Sigma.

Mark DeLuzio 

00:40:53

So lean is a lot more intuitive, a lot more user-friendly for anybody to get involved from day one. So you almost create an elite class of people in your company that are these black belts and master black belts and green belts and purple belts, and, you know, chartreuse belts, you know, and, and, and, and so what ends up happening is you got this elite people that are working on improvements, but you're not really involved in the rest of the organization. So now I'm not saying Six Sigma is a bad thing. I know certified myself. But, but what I am saying is I've never seen a company rise to excellence, to world-class accidents, including GE, okay, who use Six Sigma as their approach for continuous improvement.

Mark DeLuzio 

00:41:45

And I've never seen it yet. And maybe, maybe there's some out there that have, but, but you really got to harness the energy of the people and don't think 600 was the right tool to do that. Now, I think, I think 85, 90% of your problems can be solved with very basic problem solving tools. And I think the more sophisticated problems that require design of experiments or whatever could be salvias and Six Sigma tools, but I wouldn't convert the whole company's culture around Six Sigma just for that 10% of those problems. So, so I think, I think, I think problem solving, I don't think it has to be that hard to be

Mark Graban 

00:42:21

Well, well, maybe we'll, we'll generate some comments from the listeners about that. And maybe that's, that's a rich topic. Maybe we can delve into some other time, but to wrap up here, you know, our guest again has been Mark DeLuzio. His new book is titled turn waste into wealth, how to find cash in every corner of the company. I think it would be a great book to give to your executives as a, as an intro to the, the thinking and the philosophy. There's a lot of great lessons from Mark in the book. So thank you for that. W where can people find you online websites for the book yourself? What,

Mark DeLuzio 

00:42:59

Yeah, there are two websites. My, my lean Lean Horizons consulting company, it's www.leanhorizons.com. And then my own personal website is www.markdeluzio.com. And you can, you can learn about the book in there and you can order it on Amazon and Barnes and noble and places like that. The book, the book, basically Mark real quick is, is designed for really two audiences. One, the people that are new to this whole thing. And also it's got some lessons learned that, like I say, the mortar between the bricks that talk about some of the lessons that we learn. So, so the, the person who's a little bit more sophisticated can learn something from it as well.

Mark DeLuzio 

00:43:45

It's a book of some 48, 50 chapters. I forget how many there are two or three pages a piece. And it's a quick read. It's designed to be a lean book because I respect the CEO's time. And I know most business books don't get read. So this one needs to be done in an hour and a half hour airplane flight.

Mark Graban 

00:44:02

Yeah. It's, it's very digestible. And I think if some people have maybe, you know, gotten down the lean path without having learned some of these lessons, this will maybe course correct some folks that have been struggling cause they may be headed in the wrong direction. So thank you for the bookmark and thank you for being a guest today.

Mark DeLuzio 

00:44:19

Okay. Mark. Look forward to future conversations. Okay,

Mark Graban 

00:44:22

Well, great.

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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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