He was Chairman and CEO of Jeld-Wen, Inc. until August 2022 and, just after that, I saw him give an outstanding keynote talk at the AME annual conference in Dallas.
Gary was previously President and CEO of Honeywell Home and Building Technologies (HBT) and President and CEO of ClubCar. He also led the Trane HVAC business, among other executive roles.
He has a BS in Mechanical Engineering from Virginia Tech and an MBA from the University of Phoenix.
His book, Decomplify: How Simplicity Drives Stability, Innovation, and Transformation, will be available later this year. Edit — It's available now!
In this episode, Gary discusses his Lean origin story and how he views and drives Lean as a CEO. He reflects on the importance of strategy deployment and Lean as an enterprise approach, and shares his approach to Lean problem solving as a CEO. Gary emphasizes the impact of taking a “fresh eyes” approach to Gemba walks, and talks about the importance of being inquisitive and taking responsibility for simplifying processes (or “decomplifying” them).
Questions, Notes, and Highlights:
- What's your Lean origin story?
- Lower volume business – how to make it flow? We're not Toyota?
- Strategy deployment… lean as an enterprise
- How to be focused on most pressing needs?
- Reaction to the John Toussaint quote – “you've seen one lean transformation….”
- “I teach problem solving a lot”
- Who were your teachers, guides and coaches?
- Shedding Old habits and old philosophies
- How did you drive Lean problem solving from the CEO seat?
- How to coach others away from bad habits?
- Culture impact of coaching leaders vs. selecting the right ones for promotion?
- Having a rallying cry to set direction
- Working to reduce fear of speaking up
- Get out there… those closest to the work
- How to get other leaders out to the Gemba?
- The impact of taking leaders out on a Gemba walk??
- Some are afraid of that, making mistakes?
- The importance of taking a “Fresh Eyes” approach??
- Why should leaders be inquisitive when things don't look the way they're supposed to look?
- What's your definition of a “great company”?
- Problem Solving AND communication as much as anything else
- Influencing other CEOs to take interest in Lean yet alone drive it?
- Gets asked – What if my CEO isn't driving this?
- Decomplifying annual planning and strategy cycles?
The podcast is sponsored by Stiles Associates, now in its 30th year of business. They are the go-to Lean recruiting firm serving the manufacturing, private equity, and healthcare industries. Learn more.
This podcast is part of the #LeanCommunicators network.
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CEO Gary Michel On Lean For The Enterprise And The Need To Decomplify Work
Welcome to episode 470. It's March 1st, 2023. Our guest is Gary Michel, and you'll learn more about him and his background in a minute, but we've got a fairly unusual opportunity to hear the perspectives of a CEO. Gary has been the CEO of many organizations, and he's not just supporting Lean in those roles. He's been owning Lean and driving it as part of the culture and the strategy of the organizations he's been with. You're going to enjoy the discussion here.
Here in the conversation, he keeps bringing the talk back to the shop floor, the Gemba, and the people who work there. We're going to talk about Lean from a strategy deployment standpoint and top-down leadership. We're also going to talk about the importance of engaging everybody on the front lines and bridging those gaps between the C-Suite and the front lines.
Our guest is Gary Michel. He was Chairman and CEO of a company called JELD-WEN until August 2002. After that, I saw him give an outstanding keynote talk at the AME Annual Conference in Dallas. Gary was previously President and CEO of Honeywell Home and Building Technologies. He was President and CEO of Club Car, and he also led the Trane HVAC business among other executive roles.
Gary is an engineer. He is a BS in Mechanical Engineering from Virginia Tech and an MBA from the University of Phoenix. His book titled Decomplify: How Simplicity Drives Stability, Innovation, and Transformation will be available later this year. We'll get to talk about all of that and more. Gary, thank you so much for being here. How are you?
Thanks for having me. I'm doing well, thank you.
We cannot ask you to recreate that whole keynote talk, but there are a couple of follow-up questions and other things that we can dig into. First off, I do like to ask guests about their Lean origin story, especially as you rose through the ranks to be CEO of different companies. How, where, and when did you first get introduced to Lean?
Like a lot of people, particularly operating manufacturing businesses, we all grew up with quality, learning about quality, and demand flow. Everything came together for me when I was running a business called Road Development, an asphalt pavers, and compacting business that Ingersoll already had. We were making a major transformation in our product categories and updating our products. At that time, certainly, in the operations, we had started some Lean transformations within the four walls on some of the new lines for some of our new compactor products. It was slick. It went well. It was everything you would expect with great value stream mapping all the way down to visual management and what you would expect, even in a great line setup.
I was still subscribing back then to the old philosophy of a commercial end, product end, and front end of the business. We tossed everything over and the operations folks picked it up and ran with it from there. We were trying to take the same flow dynamics that we had in the compactor business, which is a higher volume, less variable business to the paver business, which is the exact opposite. It's always station built. It was custom. We started to think about that. We were looking at this global business, looking at this major transformation and how to flow that line. What ended up showing up for me was strategy deployment.
Hoshin Kanri, how do you align up critical few decisions across the entire organization and get people to buy in and understand their part of the whole? For me, that's when Lean as an enterprise business operating system or strategy came to life where I saw the magic of how alignment, communication, taking visual management from the top to the bottom of the organization, and combining everybody as one team. It's maybe not the initial manufacturing introduction but it's the introduction to how I saw it as a great enterprise tool.
I'd love to come back and explore some of that progression as you described it from being a manufacturing thing to being more of an enterprise system. What was the rough timeframe for when you were exposed to that in the asphalt pavers business?
The early 2000s from the enterprise standpoint.
It sounds like that was bubbling up through the organization or the sponsorship for that Lean manufacturing activity might have been taking place at a plant manager level or VP of ops level.
My VP of ops at that time had certainly brought it into that business. Not to say we didn't have elements of Lean in other facilities and other places in the business, but within the four walls was brought to me at that time.
I was wondering if you could expand a little bit. It's interesting to think about any of us individually trying to shift away from deeply held older philosophies. What I hear you saying and correct me if I'm wrong or if you can elaborate on this is that as a CEO, you were focused on sales and customer products and that manufacturing was a function that you didn't have to pay much notice to. How would you describe it and how that shift occurred?
We all grow up as general managers understanding our operations. Back in those days, we gave a portion of our time to operations and to the front end of the business. It was where your priorities were and what each business needed. In my particular case, I went into a lot of businesses that needed some transformation. That was what my remit usually was in going to these businesses. It depended on what the need was at the time. In this particular case, the business needed a little bit of both. I was able to use my manufacturing bit to work on the manufacturing side.
Again, there wasn't a tie to the overall growth strategy. It was the a-ha moment of, “If you get everybody aligned on the same page and working together, you understand what's possible. It's the right sequence at the right time, but making sure that everything is working together.” It wasn't that focused on manufacturing before. It did but putting all the elements together of flow, visual management, and strategy deployment was the first time for me.If you get everybody in the team aligned on the same page and working together, you understand what's possible. Click To Tweet
What you said there reminds me of some old Taiichi Ohno advice from one of his books about the Toyota production system. There's a chapter headed Start from Need and he would talk about your most pressing needs. There's always a risk of people wanting to be prescriptive in terms of, “Here are the tools you need to implement because here's how we did it someplace else.” What would your guidance to other CEOs be about making sure that Lean is focused on the most pressing needs of the enterprise?
Another saying there is this go see. If you go see what's going on in your organization where the work is being done, you are going to see the need. There's no doubt about it. It could be on the manufacturing floor, in functional areas, or with your customers. My recommendation to every leader is to go see. Go where the work is being done. That's where you're going to find out where the value's created, but you're also going to see where the opportunities are.
You're reminding me of another quote. This is more from healthcare circles. Dr. John Toussaint, who had been the CEO leading a Lean transformation at a hospital system in Wisconsin, had learned from manufacturing companies. I've heard John say, “If you've seen one Lean transformation, you've seen one Lean transformation.” That was my view. What is your reaction to that comment or how would you elaborate on the idea of making sure that you're not trying to copy something that worked for you before, previously, or something that worked elsewhere?
I always tell people I feel like it's either Groundhog Day or I'm the kindergarten teacher. I see the same course over and over again. I teach problem-solving a lot. It's usually where it starts. It's an easy way to start because it's something that you don't need all the other tools necessarily but you can teach a process. You don't even need a form. You can ask questions. What problem are we trying to solve? What do we know? What do we think are the obstacles to getting there? If you've seen one, you've seen one. It's true.
Where you plug in and how you solve problems to me is the essence of it all. The tools are just that. They're tools. You've got to have a culture around problem-solving and using the right tools then to solve the problem. A hammer may work in one place and need a screwdriver in another, but the idea of it flowing around problem-solving to me is where you start. Half the problem, of course, is defining the problem sometimes but I've always felt that if we can focus on problem-solving, creating an entire organization of problem-solvers even, we can then start to understand where we need to apply different tools to do different things. To me, that's the essence of how I start an organization into Lean. It's not even calling it that. We're talking about problem-solving.
I'd love to dig into that a little bit more. First off, who were your teachers, guides, or coaches in terms of this style of problem-solving?
There've been many along the way. A guy named Ken Martin was the guy at Road who was fascinated with the Toyota production system and brought me to our factory there. I've had a number of coaches along the way. You know Dan McDonald and Greg Minor. These guys have been have taught me quite a bit over the way. A lady named Mary Kotler who you may or may not know worked with me in operations at Club Car. In fact, she had come from another industry and brought some great things. A lot of people along the way, but a lot of reading, studying, and doing.
One of the things is to get out there and do it. Problem-solving is something that there's plenty written on it. You can read all about it, but you need to dive in, roll up your sleeves, and be part of helping to solve problems. Play the correct roles as well. As a leader in particular, it's about asking questions and being curious. If you have those traits, you're going to probably be a pretty good problem solver.
In your role as CEO, I'm curious to hear how you would help people through the need to shed old habits and philosophies. Let's say, for example, not wanting to take the time to properly define the problem, the tendency, or the habit to want to jump to solutions or rush into implementation. How would you coach, guide, or help people not learn Lean but move past the old way that might have helped them rise up through the ranks?
One of the things is we're all taught by our education system. Even when we get into business, it's backwards for Lean. We're all taught how to solve problems. We're taught, “Come up with the answer and give me the answer.” That's what we are. We're problem-solvers. We want to jump right to solving the problem and giving the answer. That's what gets us promoted. It's what gets us jobs and what get us promoted. We get into positions where we're trying to move organizations, and we still have that tendency, bias to action, and solve a problem. What we're not taught is how to ask questions and draw out a little deeper meaning, and what the problem might be for others and help others learn to be problem solvers as well.
For me, it's about that. It's figuring out and helping people understand that their role has changed as a leader to be somebody that's got to enable others to be problem solvers. The way you do that is through asking questions, observing, and being there. The higher in an organization you go, the further away you are from doing the work. There are a couple of things you need to realize. One, in my case, is the people closest to the work usually know how to do their job better than anybody else. They know what the problems are. If they're enabled, they'll help solve them and they'll come up with new ways to do the work better.
We need to make sure that we identify where that work is being done, where the problem can best be solved, and give those folks the tools, the capabilities, and quite frankly, the authority to go and solve those problems as well. That's how I would coach a new leader or a leader that doesn't quite understand that. The other side or the benefit of that is if we create an entire organization of problem solvers, it frees up leadership's time to do other things, solve the problems that are outside of their purview, or focus more on growth and other things that are important to the enterprise as well.
Over time, as you're working with other leaders in terms of what has an impact on the culture, how much of it is a matter of coaching up leaders versus selecting certain leaders for promotion based on their ability to adapt or adopt some of these new habits as you're describing.
It's important. In a culture of problem-solving and a culture that focuses on Lean, you have to have an environment that's aligned. I often talk about a couple of elements. One is having a rally cry within your company. It's probably something internal, but something that sets the direction for the entire company or team that helps people rally around your mission and something they get excited about and want to be a part of. To me, you can set the culture in motion in a number of different ways. One is engaging everybody at every level of the business. It's being transparent about where you are, being transparent about where you want to go, and then involving them in the process.
One of the things I like to do as a CEO, and I love to do as a leader of a business, is anytime there are new hires in the company anywhere in the quarter, I spent an hour with the group on a call or on video. If they could be local, we would do it locally, but we would normally do it that way as well. I would point out that what I'm trying to understand and create is an environment where they're not fearful of asking me questions but pointing things out to me.
What I ask in that call simply is, “Introduce yourself to me. Why did you come to the company? What were you expecting in your first 90 days or however long you've been here? How has your expectation matched reality? Are there any opportunities that you've noticed since you've been here that you could point out to us with your fresh eyes that maybe we don't see or we've been walking by?”
It does a couple of things. Number one, out of that, I get some gems of where the culture is. Mostly at that point, there are cultural things they were expecting, and it helps me understand, “Are we matching the culture we're selling or the culture we aspire to with what's there?” That's where that is. It also starts to create an environment where even somebody who's only been with the company a few weeks or a few months is comfortable pointing out areas of opportunity or problems that they see.
I do that also when people go into new jobs. It's more of a one-on-one. However, if they go into a new role, I ask them quickly within their first quarter or so of being there to share with me their observations and things that they see because it's a great opportunity to see things. I get asked sometimes. You've done this as well. You walk in a plant and invariably, you're going to see something that they've been walking by for months, weeks, or whatever.
They always get frustrated. They're like, “How come you come in here and you can see something that we didn't see?” The point is after time it becomes part of the fabric, you don't even notice it. It's not that anybody is smarter or we're trying to play a game or anything. Fresh eyes always see something that other people don't. That's about changing the culture. It's more than just a cute saying of fresh eyes. It's about creating that culture of pointing things out that may be out of place.Strive to create a workplace culture of pointing things out that may be out of place. Click To Tweet
Let's get out to the Gemba to the shop floor here with our conversation. I appreciate that you keep taking us there. Speaking of old philosophies to move away from, I saw that when I was at General Motors. The first plant manager I worked under was the traditional stay-in-the-mahogany-paneled corner office type. He only came out to the factory if there was some huge problem.
He didn't contribute much other than glaring about, “When is it going to be fixed?” versus a second plant manager who did spend all of his time out in the factory or a lot of it. He was Toyota-trained. Through the GM, he knew my partnership. How often did you run into some version of that old habit or try to convince other leaders to do what you were doing? You were leading by example but maybe that's what it took.
That's the answer. Unfortunately, there are still a lot of plant managers and a lot of companies that operate that way. I got the religion a couple of decades ago. Other people still haven't gotten it. That separates good companies from great companies. Part of it is by example. Almost every time, part of my Leader Standard Work is going to Gemba. Part of that is going into factories and participating in their walk, not creating a new one. I understand that the more senior leader you are, you show up.
Something is going to be a little bit different. It's going to be a little special, but for the most part, I ask when their walk is not creating one around my schedule. I try to walk along. It's their walk and I participate. I watch how it happens. You can usually tell fairly quickly if it's a normal practice or not or part of the organization because of how people react.
Again, when I go through there, I ask questions out of curiosity. It's a habit I have. I watch what happens and if there's something I want to ask, I'll ask it. It's like anybody else. Part of it is showing the way and how it's done. Back to that idea that we're not taught how to ask questions. We're taught how to solve problems. Even to this day, some plant managers, leaders, general managers, and non-operational leaders who are asked to go to Gemba are afraid of that.
It's something that they're not comfortable in. It's something they've never done. They're afraid they're going to screw it up or ask the wrong question. Part of it is showing that Lean is common sense. We've got visual management. We usually have the prompts there to see how things are going. It doesn't take a lot to figure out if it's right and how to figure out if something is operating correctly or not.
Usually, in a plant environment, the role that I end up playing is understanding why something has been out of whack for longer than it should have been and trying to help and provide resources when necessary to solve that problem. Sometimes, it's asking about it and making sure people are aligned. It's bringing the people along and showing by example and asking certain types of questions. After a few of them, they get the idea of what the questions are that you should ask, and they realize they're pretty practical questions.
You've brought up fear a couple of times and the need to help reduce or eliminate that fear. It's interesting when you have anybody who has decades of habit leading the other way and they're trying to do something new that can be scary. People will make mistakes when they're trying something new. Did you try to give permission or at least set an expectation of, “If you're afraid of making mistakes, you probably will and we'll learn from it and work through it?”
I'm going to make a mistake too. I'm going to ask a question and somebody's going to give me an answer and I'm going to go, “It was right there.” Hopefully, it was not an inappropriate question, but it's something that maybe didn't make sense or somebody gives me the right answer. I try to be as vulnerable and as normal as possible, and we get it. The other thing is if I'm taking somebody on a Gemba walk, to a plant, or to a functional wherever for the first time, I try to be cognizant of that. I try to make sure that they have an opportunity to see we've got to make it normal.
It's not something that we should be afraid of. We're all on the same team. We all have the same objective. We're all trying to do the same thing. This is not about playing gotcha. It's not about making somebody look stupid. It's about how we make it as easy as possible for the people doing the work to do the work. As somebody coming from outside of the actual work environment, I may have resources, tools, or seen solutions that they haven't seen. We try to make that and we try to make leaders understand that their role is to try to integrate the more tools that they have to bring to the problem. It's not your job to solve the problem. It's their job to help solve the problem and to make the resources available to do it.
Back to the beginning of your talk, you caught my attention right away when your first slide was a picture of Max, a production specialist from JELD-WEN. I was wondering if you could tell us that story and then maybe weave in a little bit of why that was the way you started your talk there at AME because it stood out. That doesn't always happen.
When you're giving a talk at a Lean conference, you want to talk about what works and what Lean is about. That particular Gemba walk and story has always resonated with me. It happened at that time. It was probably months before but maybe a year ago, I was on a Gemba walk in a JELD-WEN facility in Venice, Florida. It happened to be where we make vinyl windows and patio doors. Max is a glacier. He works on the line there. At that time, he was putting together vinyl windows. He's the guy that puts the glass in the windows and assembles them. He's a pretty important guy.
We start out on the Gemba walk and we were doing stand in the circle exercise. You stand there, you observe the work being done, and you do nothing else, except observe and then try to understand what's going on. What we saw with Max was he was running around like crazy. He's waving at us and smiling. He's a friendly guy but he's working hard. He's running around trying to find glass to put in the windows that he was building that day. We stopped and talked to Max, and Max explained to me that normally, the glass is on the carts in a sequenced order. He picks the glass and that tells him what to build. He builds the window and everything is great. Unfortunately, some of the glass was not where it needed to be.
There were empty slots in the carts. He was finding complete sets that he could build. He was on the fly building windows that he could build, which is great. He didn't want to miss this task. He didn't want to upset customers down the stream. The reality was he was working extra hard and it wasn't right. I asked Max, “What would it take to solve your problem?” I would list first, let's take care of Max because we want Max to stay there and build windows. He said, “If I could have a spotter or somebody that could do this reordering of the glass and the carts for me, that would be helpful. I could build more windows faster.” We did that right away.
The reality of that whole story is, it wasn't Max's problem. It was beyond Max's scope to fix the problem. We tried to help him right away with that. By observing the work and talking to Max, he already had a solution in mind. We just needed to make it happen. The real problem was we weren't getting glass. There was a glass shortage at the time and glass wasn't coming in. We needed to probably adjust our standard of work to make that happen. A lot of things come out of that story. One, let's help Max and make sure that we're keeping him happy so we can keep customers happy. The second piece is making sure that we ask enough questions to understand where the problem is.
You can imagine if we'd never gone to Gemba, the customer service people are complaining that customers aren't getting their windows on time, complete, or whatever. We could sit in a conference room and solve that problem and say, “We need to push more windows out. We can yell at somebody and do whatever.” Maybe we're not getting the sales we think so we go out, we do a promotion, or do something else when we need to sit down and solve that problem.
Find out that we have a supply issue at that particular time and we need to go solve the supply problem, which is causing this overall problem of getting enough windows out to customers at the right time. The story to me exemplifies by going and seeing while you think you're solving one little problem in a line in a factory for one guy. However, what you're doing is finding out where your big problems are, where your constraints are to grow the business, meet your commitments, and keep your customers happy as well.
The story and the way you talk through it does illustrate so many of the points that you've made about being inquisitive instead of making assumptions or making sure you understand. Is what we're observing here normal? Is it a bad process or has something gone wrong with the process? As you described, there are so many ways that could get off track or go off the rails if, let's say, the one new habit of going out into the factory still brings with it the old habits of needing to have the answer rushing into action, making assumptions instead of being inquisitive. That could have gone differently with a different set of leaders.
The great part of that is that was not normal and they recognized it wasn't normal. You're right. It could have gone a lot of different ways in different plants and scenarios.
Let's talk about your book, Gary, Decomplify, a word that may or may not be in the dictionary. I didn't check.
It is not.
Tell us the origin of creating that word, decomplify, and more importantly, what it means to you.
The origin of the word is decades old. In one of my early leadership roles, it was lamenting with somebody or with a colleague about how they always seem to complify or they always seem to make more complicated all of our processes more. They don't leave things alone. Things could be so simple but they, probably corporate or whoever at the time, seem to always make things more complicated than they need to be. We've all had that question or comment. At some point, a colleague shared that sentiment with me as well and he talked about how they complify things. For whatever reason, I picked up that word and it became part of my lexicon for a lot of years.
The reality is when I retired the first time, somebody made that comment. They gave me that word as my word at my retirement dinner. I thought about it and decomplifying things is something I'm always trying to do. I thought that it fit well with the style of leadership and a lot of the things we talk about in Lean that I profess to use and I want our organizations to be. Quite frankly, the simpler we make things, the easier it is number one, to stabilize them but also to transform them and to grow.
In that process of decomplifying, one other question that comes to mind is as a senior executive, you're thinking of all the things you could be focusing on and the high-level strategy deployment questions of what you should be doing. How do you diagnose? Do we need to simplify and take ways out of what we're already doing versus a need to be innovative and to be doing new things in a different way, or ask a different way, improving the old process versus creating something new? Where do you find that balance?
You're almost asking the old paradoxical, “Do we want productivity or do we want growth? Which do you want?” I want both. We've got to do it in the right balance, which leads me to the premise of my whole belief around decomplifying. Most companies probably all share the same strategy. They all want to outgrow their competition on the top line. They want to gain a share in their product category. They want to be leaders there, and they want to continuously improve their margins and their returns for their shareholders. They all want to be great companies, which has led me to this definition of a great company. A great company in my mind is a company that people want to buy from, people want to work for, and people want to invest in.
People want to buy from a great company because they like the services and the products that the company offers. They feel that the relationship is great and it's easy to do business with a great company. People want to work for a great company because they're aligned with the direction, values, and aspirations of the company. They feel that they can make a difference and a contribution. It'll be recognized as well as they can realize their own personal and career aspirations.
People want to invest in a great company because it delivers superior financial returns sustainably and consistently over a long period of time. I'll add to the caveat that great companies also always do the right thing. If that is your premise for what you want to do, the importance of being able to do those things sustainably over time means a number of things.
Lean gives us a continuous improvement mantra and culture, the ability to continually look at what we're doing to continually improve and grow. Part of that is the ability to innovate, change, and redefine our future. If we always do what we're doing, we're probably going to fall behind and it's probably not going to be what will sustain that same definition of a great company for our customers, for our people, or for our investors in the long-term.
While we're focused on doing what we do better and better over time, and we can always do that, we should also be expending energy to look at what we can do to continue to transform ourselves using new technology, new products, new business processes, or a whole new business model. It could be associated with how we serve our customers as much as what we sell them. There are a lot of different places we can look for innovation. By the way, they come out of problem-solving. They come out of being at Gemba, being out with our customers, being out and understanding how to solve their problems and even their customer's problems. It becomes part of how we innovate going forward. It's not an either/or to me. It's an and.
Here's another and, problem-solving and communication. One thing that was interesting practice that I was going to ask you about was what you've called the A3 Open Mic. If you can talk about what that is and why that was so helpful?
I'll give the credit where it's due to the team at JELD-WEN. They implemented something and I loved participating in it but it was called A3 Open Mic and once a month was the cadence. It was an open opportunity for anybody that was working on an A3 or had recently completed an A3 to get on the call. It was a nice mix of people that wanted to share a problem that they had solved or were solving for the benefit of, number one, saying, “We did this,” but also sharing across. Box nine, by the way, on an A3 is always forgotten. What did we learn? Who can we share this with? Where else might we see this problem show up?
This was part of box nine of sharing across the organization. The other part of Open Mic was if you had an A3 that you wanted some coaching on or felt that you were stuck or could use a little bit of help from across the organization, this was an opportunity that became a safe environment, believe it or not. Even though an Open Mic asks those questions to share your problem in an open environment, it shows a trusting open problem-solving culture that can serve, that can thrive, and that people show up.
I assume some people are probably told by their boss to be there, but for the most part, it's a volunteer opportunity. It is great. It's a good balance. You get kudos for solving a good problem and sharing it, but you also have an opportunity to get help from people that otherwise, would not be in your circle of helpers.
When you talk about that safe environment, it's not just safe to come and share successes. It's safe to share your struggle.
That's what's important about a thriving culture. To be that great company culture and decomplified culture, you've got to have a safe environment where it's okay to bring up problems. If you don't bring up problems or identify them, you'll never solve them.The workplace must have a safe environment where it is okay to bring up problems. If they are not identified, you will never solve them. Click To Tweet
I have one other thing I wanted to ask for before we wrap up. You talk about sharing. You talk about that aspect of problem-solving. I'm picturing it may or may not exist. Gary Michel, personal or corporate A3 talks about the problems you've solved, the state, and the countermeasures that include Lean, and you can talk about the results. Now, you want to share this with others.
I'm curious to hear your thoughts. There's always discussion around this question of, “If Lean is clearly a better way, not just to do manufacturing, but a better way of running an enterprise, and this has been known about for decades now, why does it still seem like it's the exception more than the norm?” What are some opportunities, and I'm sure the book, Decomplify, will be part of it, to share this in a way that maybe influences other senior leaders to maybe also try this path?
I don't know the answer to that. I can't imagine running a company any other way, but I know how hard it is to start a company on that path because I've had to do it a few times. It takes somebody, an impetus, almost a reason sometimes to get started. It's what is our definition of Lean. What I talk about in my book is Lean is part of it. It's an important toolset, but it's a toolset that helps you. My book is not in and of itself about Lean.
The reality is it's about creating that culture where you focus on the things that are important and you strip away the things that are not. You focus on value, creating value, and this is what Lean is about as well. Focus on what creates value, what matters to your customers, how you engage and respect your employees and associates, and how you deliver consistently the results that people look for to invest in.
To me, I've not found a better way to do it than to use Lean tools, but they're tools. They're just that. You still need to have a direction, a strategy, and a way that you're planning to go. People get confused like it's one or the other or that you see this massive number of tools and Lean, and you think you've got to know what every single one of them is.
The big secret for me as a leader is you don't need to know what all those tools do. If you need a specific tool deployed, there are plenty of people who can help you teach people to use tools. That's not it. It's about common sense and understanding this idea of having a problem-solving culture and focusing on those few things. For me, it's the way I do it. We have these conversations but it's a matter of understanding how to stay there.
Now, the other side of that question that I get a lot and I got at the conference we were at is, what if the top leadership of my company doesn't support or isn't pushing Lean or the CEO isn't driving this? To me, that's the best of all worlds. Everybody from top to bottom is engaged and using the same tools in the same way. If you're running a function, a factory, or a business, you can deploy Lean. You can use the tools, the mentality, and the crux of it to operate your business. Everything can start there. Once you start performing as a business and outperforming everybody else, other people are going to ask, “What's going on and how are you doing it?” I can assure you, you'll become the new Lean zealot and people will be copying.
I would agree with you. It doesn't seem like you would want to send a CEO to a class to learn all the tools, but you're talking about Lean tools plus mentalities and a culture management system. To me, that can all be wrapped in this label of Lean or the Toyota Way or however you might label it. You're describing all of that working together, and it seems like the CEO or senior leaders have more influence around culture.
Maybe the way to put a fine point on that is the first chapter of my book is to go see. You'll see Max again, and you'll hear about why that's important but it ends with the concept of Leader Standard Work. It talks about leadership and leaders being important to creating this great company culture and becoming great companies. It ends with talking about Leader Standard Work, and where leaders spend their time is indicative of being complicated or not.
To me, what I do every day, every week, every month, every quarter, or every year becomes important. If you can decomplify your work and lay it out where you're spending time, you are committed to spending time going to Gemba, developing your people, and with customers and investors in the right proportion, that becomes the mantra. That becomes the cadence for the rest of the company as well. It's how you spend your time, how you set out to spend your time, and then live up to that. Leader Standard Work is one of the components that I bring in early. In fact, in the first chapter of the book.If you can decomplify your work and lay it out where you're spending time, it becomes the mantra of the rest of your team as well. Click To Tweet
It seems it's a shift from somebody who might say, “I'm too important to have Leader Standard Work,” to realize it's important that they do. That's moving past an old philosophy of, “I'm reacting to things. I can't plan out my time.”
If you're reacting, then you're not in a decomplified state. You're not in a Lean state either. You need, as a leader, to be able to look around corners. You need to make sure that you're focusing on the right things, the things that add value. Making that determination is important. The way that you cement that, the way that you codify that is in creating Leader Standard Work. Is every part of my Leader Standard Work written down to step 1, step 2, and step 3? No, but is it laid out in a cadence of, “I do these things?” The answer is yes. Publish that. Let people know what that is. To me, that's important. That sets the tone for how you want to operate the organization.
Gary, maybe one final question. You mentioned strategy deployment earlier. Can you talk about decomplifying some of those annual cycles of planning, evaluating strategy, and turning strategy into action? Can you give us a before and after comparison of pre-strategy deployment and then what the benefits of strategy deployment were?
We tend to focus on the things that we're doing now rather than on the things that maybe we should be doing. It seems to be the way I sum up the difference. The tradition of these massive strategic plans put a lot of hard work. A lot of data's collected and days and days of presentations. They're beneficial, but they're rare. The problem with those is they rarely get executed in a way that's sufficient. They're not tied to the reality of the organization.
I'm not discounting the work. The work needs to be done. We need to understand what's going on in our markets. What technology capabilities are there? Are there better operational solutions to things? What problems could we solve for our customers that would help us to reinvent ourselves over time? We need to do that. I like to do it in a process I call critical strategic decisions. It's a similar type of work but defining, in the old traditional way, where are we going to play? What game are we playing? How do we win? What do we need to win? What are the resources, tools, and systems that need to go there?
We start to focus on a couple of these. Some people call them breakthrough initiatives. I start with critical strategic decisions. What are those 2 to 3 things that we're going to focus on, we believe, and we're all going to get behind, bar anything else in order to do? Once we've done that, then we go into the deployment part or the execution part, which is the hard part. That's where strategy deployment Hoshin comes in. You enter that process with these critical strategic decisions, and then you start to break them into manageable chunks that you can define so that people can understand. What do we need to do in year one and then go after it?
Start to cascade those goals so that you're tied from your critical strategic decisions through your annual objectives, all the way through the initiatives and what people need to drive. That's what you review every month. You review your financials. I make my financials a part of the tracker for every business or function. You review those. You see if you're on track or not on track and what you need to do there, but you're also reviewing the status of where you are on those critical strategic decisions every single month and looking at the process as much as the output.
If you can make that part of your normal tactic, it becomes this virtuous cycle that starts feeding itself. Your strategy discussions tend to be focused on the summer months and getting ready for an annual operating plan. The reality is we're always thinking about it and always modifying what we learn month to month, quarter to quarter, and year to year.
I will point out that I try to also make it easy on the annual operating side. I have an algorithm for the financials. If our goal is always to grow the top line better than our competitors and continuously improve our margins, there are a few things that we need to start out on the financials with to allow ourselves to make sure that happens. Also, to give ourselves money to invest in the rest of the business and the CSDs.
I do have an algorithm for that, but the point is to make it simple. Make it easy to understand and get it to the point where after a couple of cycles, it's part of your cadence and again, part of your Leader Standard Work. The idea of creating that big book and putting it on the shelf never appealed to me. By the way, most of it never gets executed.
Gary, thank you first off again for speaking at the AME Conference. Thank you for being here with us. We've been joined again by Gary Michel. He has an upcoming book. I'm excited about it, Decomplify: How Simplicity Drives Stability, Innovation, and Transformation. Hopefully, I've made good use of your time. I'm going to think about the questions I asked versus the questions I should have asked. I'll think of that as my own strategy deployment cycle here.
It was great. Thank you so much. I appreciate being here. It's always a lot of fun to share some of these stories.
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