This chapter introduces our Lean Business System Reference Model™. This reference model provides the business and operating architecture of a superior adaptive systematic process of improvement.
It is important to address this issue right up front. Organizations have called their broader systematic improvement initiatives by many names such as the XYZ Company production system, the XYZ business system, the XYZ Lean system, or the XYZ management system. It is the content and substance, not the name, that makes these initiatives successful systematic processes of improvement. A humdrum rebrand of a traditional Lean manufacturing program that mimics the successes of the Toyota Production System, and the successes of other companies, will not bring sustained improvement.
Caution: If an organization chooses to call its systematic process of improvement the XYZ Lean management system, it needs to redefine Lean as a broader body of improvement knowledge focused on the enterprise, not the newest flavor of Lean manufacturing. Many organizations have joined this growing trend of renaming Lean manufacturing (as it has always existed) to the Company X business system. This does not make it a business system—an adaptive systematic process of enterprisewide improvement. We have already discussed the severe limitations of business improvement with a narrowly focused tool-set approach or simply attaching a new label to an old malfunctioning or peaked-out improvement program. Many speakers talk about their company’s Lean business system and jump right into discussions about Lean manufacturing and tools. Most authors conceptually introduce a Lean business system and also jump right into discussions about production storyboards and action plans, A3s, kanban, 5S, leveling production, and floor gemba walks, all of which relate to manufacturing and tools. Peel back the onion and it is more mimicking of the visible Toyota Production System (TPS) details.
In this chapter we introduce our generic architecture of an adaptive systematic improvement process called our Lean Business System Reference Model. This reference model goes far beyond Womack’s five principles of Lean or Toyota’s 14 points or Toyota Kata’s manufacturing focus or a limited list of TPS improvement tools. Organizations that keep their scope on the traditional principles of Lean manufacturing only will miss the point. None of this is intended to be a put-down; the world has changed and so too have the requirements and approaches to achieving a higher order of improvement. In practice, a preferred name for our architecture is the XYZ Corporation management system or XYZ Corporation business system because people and organizations are tainted by previous Westernized improvement programs and their associated terminology and tool sets. Nothing against Toyota, but I recommend that organizations avoid the name XYZ Corporation production system. It becomes much easier to describe adaptive systematic improvement as a generic enterprise-focused name with a clean slate, rather than redefining Lean or production or operations excellence into something other than what people know it to be from past experiences. People in some organizations think that they already have this management system or business system in place. A closer look reveals that it is in name only, while the substance of a limited, mediocre, go-through-the-motions Lean manufacturing program has remained the same. We are talking about an authentically new generation of expanded, higher-order Lean. Most importantly, we are talking about a totally integrated, enterprisewide business system or management system. A major objective of the Lean Business System Reference Model is to guide organizations away from the superficial mimicking and success-limiting scope of Lean manufacturing principles and tools and to think, innovate, expand boundaries, develop the right improvement Kata culture, and become the next global Toyota organization in their own way.
Throughout the book we use the terms Lean, Lean Six Sigma, continuous improvement, strategic improvement, and business improvement interchangeably when discussing the broader topic of adaptive systematic improvement because it no longer makes sense to treat the specific methodologies and tools of improvement as stand-alone programs. We also encourage the reader to avoid the great debates about tools. Pigeonholing improvement methodologies is success-limiting thinking, not Lean thinking. We understand that there are different definitions, terminology, and tools at the micro level, but there are just as many overlaps. Besides, this is how Western organizations and experts chose to package these individual manufacturing-focused improvement programs. The term Lean Six Sigma was a positive attempt to integrate the methodologies and tools toward a unified body of knowledge. The term operations excellence was a further positive attempt to “detool” improvement with a nontool label. Fact is, it is all improvement. For example, does Lean not promote standardization thereby reducing process variation? Does Six Sigma not eliminate one or more of the eight wastes when process variation is reduced or eliminated? Does enterprise resource planning (ERP) and theory of constraints (TOC) not enable Lean and Six Sigma? Does hoshin kanri thinking not apply to all forms of improvement? Does Six Sigma not enable Lean through data analytics and simulation? Is value stream mapping (VSM) a Kaizen, Lean, or Six Sigma tool? Are there not Kaizen activities that stem from all types of Lean, Six Sigma, IT, supply chain, or new product development projects and improvement activities? Is it right to avoid Six Sigma because Lean is easier? Which is better: Lean, mobility, business analytics, or 5S? What is the most popular tool to use when implementing Lean? Which tools accelerate innovation or technology integration? What’s next after Lean and Six Sigma? If I had a dollar for every time I have been asked the last question and many other naive questions about improvement, I could go on an exotic vacation!
These comments are symptomatic of naive improvement organizations and their wavering leadership and fanatical focus on tools and terminology, while missing the point of the integrated system, spirit, and deep cultural foundation of improvement. Many practitioners continue to view Lean as a magical set of improvement tools, principles, and buzzwords to solve every problem. On top of this, there is no shortage of misinformation, silly debates, misunderstanding, misapplication, and totally incorrect advice about the use of the various improvement tools themselves. This is easier than addressing why the problem is there and how to prevent or eliminate it. This approach to Lean (“improvement toolitis”) is a psychological phenomenon about how organizations have attempted to implement Lean and continuous improvement in general. I have heard people in organizations ask questions like, “What are we doing today—Kaizen, Lean, or Six Sigma?” or, “Is it time to do 5S yet?” Organizations need to break out of this improvement toolitis trap because it confuses the hell out of their organizations. Even Frederick Taylor and other pioneers would think that we lost our way by separating his principles of scientific management into individual tools-based programs and disconnected tool sets. The purpose of improvement is most important, and the means of improvement (i.e., methodologies and tools) are inseparable.
Now we are learning about Kata—originally the teaching and training methods by which successful combat techniques were preserved and passed on in Japan. Practicing Kata allowed a company of warriors to engage in a struggle using a systematic approach, rather than as individuals in a disorderly manner. The basic goal of Kata is to preserve and transmit proven techniques and to practice self-defense. By practicing in a repetitive manner, the learner develops the ability to execute those techniques and movements in a natural, reflexlike manner. The goal is to internalize the movements and techniques of a Kata so they can be executed and adapted under different circumstances without thought or hesitation. Toyota Kata demonstrates the company’s serious, relentless, and never-ending philosophy about continuous improvement. The book, Toyota Kata by Mike Rother, is a great reference to advance Lean manufacturing; it reinforces Toyota’s philosophy, autonomous thinking, mentoring, and collaboration regarding improvement, and Kata is a great descriptor for this process. Toyota and other Eastern corporations have learned to work this way as a natural national standard out of sheer necessity. Toyota’s culture was not naturally omnipresent; it was developed over the past 70 years by Toyota managers who were often ruthless about success. Their employees and their families were starving, respected authority, and viewed group success as being more important than their own self-interests. Western organizations on the other hand are motivated by crisis, immediate reason, and self-interests. Western organizations have more than enough talent and capacity to create a permanent, adaptive, systematic process of improvement. The difference is choice, which is directly related to cultures. Global Kata is our answer for an integrated operating system to the future of improvement. When various other basic industrial engineering fundamentals were exported to Japan after World War II, Kata was incorporated with them. Japanese corporations learned and became the global grand masters of improvement. What is the age-old secret? Adaptive systematic process driven by people, innovation, and culture. The philosophy and principles are universally applicable to all organizations interested in discovering their next generation of improvement. Adaptive systematic improvement means a return to the integrated body of knowledge and a culturally grounded, adaptive systems thinking approach about improvement.
Let’s talk about the title of this book. What is the difference between Toyota Kata and Global Kata? Toyota Kata is based on the Toyota Production System and is focused on Toyota’s meticulous behaviors and thinking (Kata) in production. In this setting, processes are typically more defined, standardized, and visible (via our senses) by specifications, routings, operator and equipment work instructions, maintenance schedules, production boards, and so on. Some organizations have directly applied TPS concepts to the office with some degree of success, but it is an exception rather than a widespread best practice. The objective of Global Kata is to design, integrate, adapt, systematize, and scale Lean across the entire enterprise and beyond.
Global Kata is a broader interpretation of Kata based on the visible and invisible aspects of how organizations define, create, nurture, and reinforce patterns of behavior and attribute codes in their enterprisewide culture. Visible includes the principles, methodologies, and best practices; invisible includes patterns of behavior and cultural attributes plus unknown and undiscovered opportunities (which are also invisible). There is an unlimited amount of unknown and undiscovered improvement opportunities in the broader and more complex interconnected network of professional knowledge and technology-based transactional processes. These opportunities also are invisible and cannot be harvested with a narrow production tools and principles focus. Here is the big differentiator: The visible and invisible complexity of improvement increases with the level of globalization and the human professional and technological content of processes, but so does the incremental value contribution of improvement. The challenge is that organizations cannot uncover and harvest these opportunities with a limited Lean manufacturing tool-set mindset, and a single production model for patterns of behavior and cultural attributes. Global Kata nurtures and reinforces the right desired patterns of behavior or Kata across the global enterprise, but it also recognizes and adjusts to local cultural norms and customs. Kata is different in every organization and in every geography. The objectives of improvement may be uniform, but how it is achieved and sustained around the world is influenced by idiosyncrasies between cultures.
Lean manufacturing matters, but it is shrinking in terms of its impact on the total cost of doing business globally. Let’s be clear: Global Kata is not a put-down of Lean manufacturing, TPS, or Toyota Kata. In fact, it is an endorsement based on the need to correctly scale Lean globally in all organizations, in all industries, in all types of different operating environments, in all operating processes, and in all cultures. This is a very challenging undertaking from organization to organization. How does an organization address these challenges of improvement correctly? It involves designing the conceptual architecture, structure, processes, and measurements for a company-specific Lean Business System. It involves integrating all improvement methodologies and tools (e.g., Kaizen, Lean, Six Sigma, theory of constraints, and a big plus—technology) into a consolidated, higher-order body of knowledge. It involves adapting improvement to very different improvement situations—through the existing body of knowledge, or through creating and expanding the body of knowledge with new approaches. It involves systematizing the planning, deployment, execution, sustainability, and internalization components of strategic, continuous improvement. Finally it involves developing talent beyond the tools tradesperson level to innovative and creative problem solving. The degree to which these activities occur (i.e., customization) in our Lean Business System Reference Model is driven by business requirements and cultural development needs. In our architecture, the customer and market requirements are a given. Adaptive systematic improvement is always customer-centric. A true enterprisewide Lean Business System is the next generation of improvement.
Figure 2.1 illustrates the journey to Global Kata. The benefits of a Lean Business System are significant because the system creates direct improvements on processes, interaction improvements between processes, and residual improvements on other processes throughout the entire enterprise network. Also, it is routine for forward-thinking organizations to have collaborative improvement initiatives underway beyond the enterprise with customers and suppliers. This creates a single enterprise model of thinking about improvement. The path to success is very challenging and confusing from organization to organization. It involves the precise integration of improvement plus technology. Another variation is that part of the infrastructure of a Lean Business System manages the obstacles (through preventive and predictive analytics) and ideally reduces or eliminates the obstacles. Does it really eliminate obstacles? No, but it minimizes obstacles so that they become small manageable bumps in the road, and it builds the confidence and capability to deal with them without fear. The limit of improvement is the self-imposed limit that executives choose to place on their organizations; otherwise, the sky is the limit! There is no recipe of concepts or a standard tool set to get there. Our Lean Business System Reference Model provides guidance about how to proceed on the journey to this next generation of improvement.
Figure 2.1 Journey to Global Kata
Copyright © 2015, The Center for Excellence in Operations, Inc.
Throughout the book I frequently remind the reader that my message is not a criticism of Toyota or the Toyota Production System (TPS). I admire Toyota and many other great organizations that enjoy Lean benchmark success—the 20 percenters. The real problem is how other organizations have superficially interpreted and deployed the TPS without an appreciation of its deep, holistic, and systematic architecture (i.e., the visible principles and tools and the invisible Kata). The largest takeaway for the reader is this: If organizations remain on the same “mimic the manufacturing tools and principles of TPS,” they will achieve diminishing results in an economy that demands higher, enterprisewide expectations. Additionally, they will never become a great adaptive systematic improvement organization like Toyota. A different Lean paradigm is needed to achieve new breakthroughs in improvement and superior performance. Let’s now shift to Toyota’s quality problems in the past few years: Millions of automobiles were recalled for accelerator pedal entrapment by out-of-place floor mats, unintended acceleration, stability control problems, corrosion, faulty air bags, and a few others. No organization is perfect at everything all the time, and stuff happens! A further look into the recalls reveals questions about whether these issues were product, dealer, or customer caused. Nevertheless, did anyone notice how quickly Toyota rectified these problems? Do you know how it did it? It was not with the TPS. It was with its TCSWRS (Toyota customer service and warranty repair system) and TDES (Toyota design and engineering system). Has anyone heard of these? Is anyone aware of the TCSWRS and TDES tools? Of course not. Do you know that in this same time period Toyota’s growth in market share, profitability, gross margins, and earnings before interest, taxes, depreciation, and amortization (EBIDTA) performance was superior to all competitors? Incredible! My point is that the behaviors, thinking, spirit, and culture of excellence (Kata) of the TPS exists beyond production and throughout Toyota’s entire corporation. However, these values and code of conduct of perfection are invisible. Toyota understands that success requires more than TPS tools and terminology and a limited focus on manufacturing. For Toyota, TPS is really a holistic business system or Total Business System (TBS). Now it’s time for other organizations to look beyond the visible and oversimplified tools and signage, and see the whole of Lean and its greater possibilities. This is the essence of Global Kata.
The next stage in the evolution of improvement is being driven by a combination of experiences and lessons learned, as well as the rapid evolution of globalization, redefinition of industry structures, technology, and sheer velocity to play in this game. These complex changes present new opportunities because they are leveling the playing field of improvement where the aggressive winner takes all. All industries and organizations have new and much greater opportunities for improvement that they have not discovered yet. Executives and their organizations must integrate strategic and operating improvement into their business model DNA if they can ever hope to harvest these new opportunities.
For most global organizations, the next stage of evolution of improvement is the challenge of how to design and implement a culturally grounded, continuous, and sustainable process of improvement successfully with the right approach, velocity, focus, simplification, efficiency, and ease, while eliminating or working within the dynamic operating models, realistic constraints, and absorption bandwidths of organizations—i.e., how much people and organizations can really do before they become totally overloaded and less efficient at everything. An adaptive systematic process of improvement incorporates many higher-order characteristics. Adaptive implies a customized design around specific requirements and evolving needs and opportunities. Systematic implies an integrated and precise, sociotechnical system of improvement. Systematic requires the existence of a formal system. Process implies that there is a standardized protocol of best practices for improving how we improve. Improvement implies a core competency of management approaches (plural) for raising the organization to a higher state of overall performance and competitive success through structured means and deliberate actions. An adaptive systematic process of improvement is the combined strategy of Deming’s back-to-basics and other timeless fundamentals, innovation and creativity, the integration of enabling technology, and adaptive improvement across diverse industries and environments. Organizations can bring these complex elements together only through a systematic planning and execution architecture that leverages culture and fosters a natural way of process thinking and improvement—an improved Kata or cultural standard of excellence in how people autonomously think and work, which is the soul of the organization that embodies its meaning, vision, purpose, and inner identity of greatness.
Before we hastily take off into the future, let us not forget to integrate the history and the lessons learned into our systematic process of improvement. These are the timeless fundamental requirements of a systematic process of improvement provided in Chapter 1. An adaptive systematic process of improvement must integrate these timeless fundamentals from the past that are still very relevant for the future. Western organizations must acknowledge these lessons and make sure that they do not repeat the same mistakes in the future. Otherwise their adaptive systematic process will be nothing more than another new label for another fad program.
There are many new global challenges and cultural factors that are driving the need to invent a superior process for how Western organizations improve. Executives and their organizations need the capability to expand the competitive space and quickly and in real time to understand gaps between current and desired performance. Consistent with this is to innovate and execute superior strategies and industry practices to become the best. Organizations must invent a superior integrated process of planning and implementing change while growing talent and evolving culture. This process must be a fit with both business needs and cultural values: simplified and easily managed, laser-targeted on the largest challenges, rapid deployment, rapid results, and visible improvement that enable both short- and longer-term performance, yet continuous and able to develop talent and evolve culture (e.g., smaller, continuous, high-impact increments rather than waves of large 6–12 month projects, with some exceptions of course). They also need to integrate technology and improvement through the use of more integrated business architectures, business analytics, mobility, and real-time digital performance dashboards, to name a few.
The following points summarize our future requirements discussion into eight specific areas. These are broad business requirements for an adaptive, systematic management process. We explode these basic requirements into our full Lean Business System Reference Model later in this chapter. The general requirements are included below.
1. Adaptive, systematic leadership. The process of leadership and governance that continuously scans for new opportunities and deliberately evolves the cultural standard of excellence through the right improvement-enabling behaviors, choices, and actions.
2. A living strategy and alignment process. A formal best practice of continuously scanning new business requirements, recognizing needs to change, and prioritizing and aligning improvement activities with the business plan and operating plan.
3. A formal systematic infrastructure of improvement. This is the basic physical, organizational, cultural, social, technical, and feedback structure that enables improvement to function as a precise, sociotechnical operating system.
4. Continuous cultural and talent development. A means of continuously educating and developing the employee talents and skills to evolve the systematic management system to higher levels of achievement performance.
5. Integration of all improvement methodologies. The unification of all improvement methodologies and tools into a holistic body of knowledge and sociotechnical system of improvement.
6. Efficient planning, deployment, and execution process. Reinventing the process of improvement that is both aligned to and evolves with Western culture and values (e.g., laser-targeted, simplified, multiple shorter horizons; rapid deployment and results; high-impact, continuous, manageable, positive experiences; enabling monthly, quarterly, and annual performance; people and cultural advancement).
7. Business performance-based success. A crystal clear picture of how improvement is directly contributing to stakeholder value using “hard metrics” (e.g., growth, market share, brand loyalty, cost reduction, quality and reliability, velocity, EBITDA, accumulated rate of improvement, and superior customer experience).
8. Improvement of the invisible underpinnings. More focus on behavioral alignment, talent expansion, coaching and mentoring, and cultural evolution. The soft stuff is the tough stuff because it is not observable through one’s natural senses, but it is a “must do” for autonomous adaptive systematic improvement.
The requirements provided are critical to a successful systematic process of improvement. This chapter provides the detailed architectural design of the Lean Business System Reference Model and its critical success factors. This is the architecture for what ends up as (your company name) business system, business improvement system, management system, or another relevant name of choice. It is the total operating system of an integrated, adaptive systematic process of improvement. The architecture incorporates both the timeless fundamentals of improvement that history has taught us and the challenging future requirements that drive the need for improvement higher than ever before in the history of improvement.
As a prelude, let us look at the decades-old Western definition of industrial engineering:
Industrial engineering is concerned with the design, improvement and installation of integrated systems of people, materials, information, equipment and energy. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems.
Institute of Industrial Engineers (IIE)
The definition talks about a very important principle of improvement in terms of a system, not an independent collection of tools. When the basic discipline of industrial engineering was exported to Japan for its reconstruction efforts, managers there understood and adapted this principle as a religion. Integrated system is the heart of the Toyota Production System. Taiichi Ohno, an industrial engineer by trade, kept this integrated system together as an improvement operating system. The Japanese implemented quality and process improvements as an integrated system, a systematic process of improvement. They evolved the discipline of continuous improvement into a deep philosophy and culturally grounded way of thinking and working. They mastered adaptive systematic improvement because that is how the U.S. reconstruction support was presented to them, not knowing that they would evolve to a global reference point for improvement.
There is a major difference between a well-architected, organization-centric adaptive systematic process of improvement and a typical Lean program. Lean and other continuous improvement programs of the past have been more focused on tools to make improvements in manufacturing operations and equipment. These initiatives have come and gone as discrete, short-lived programs, while Toyota enjoys a unified continuous process of improvement and the spirit and culture to keep it alive. Continuing on the same path of improvement in light of all the structural and technology changes is the main reason why organizations are achieving less with more in their Lean initiatives. As the work content of organizations advances more toward professional, technology, and transactional processes, organizations must progress from a tools-based silo approach focused on manufacturing to a systematic process of improvement across the enterprise and extended enterprise. It is becoming increasingly difficult to generate substantial proportions of business improvement with a production-based Lean improvement initiative. Additionally it is becoming more complex to adapt and scale Lean correctly throughout the entire enterprise. Executives and their organizations need more practical guidance to evolve to this next generation of improvement. The basic Toyota philosophy is applicable, but the “production system” concepts and tool set are not enough to harvest the larger opportunities in complex global supply chain management, new product development, outsourcing rationalization, product portfolio management, inventory pipeline performance, R&D and innovation, customer relationship management, integration of enabling technologies (e.g., real-time digital performance dashboards, business analytics, mobility, cloud Lean applications, visualization, system modeling, etc.) and contractor/supplier management issues. There is a major need to expand Lean correctly across the enterprise and extended enterprise, and across diverse industry sectors with very different goals and operating conditions. To accomplish this major objective, the level of talent, knowledge, and body of (Lean and continuous improvement) knowledge must be both integrated and expanded.
Figure 2.2 provides a concept overview of the Lean Business System Reference Model. What is the purpose of a reference model and why is it needed? Our reference model is an architectural framework of integrated concepts, processes, and best practices that is used as a guide to communicate, educate, and create a shared understanding of a holistic, enterprisewide Lean Business System. The Lean Business System Reference Model helps organizations to design, integrate, adapt, and systematize improvement in a variety of different industry environments, business requirements, situational conditions, cultures, and industry segments. The philosophy of improvement is universal, but the correct path to adaptive systematic improvement is very different in different industries, operating environments, and cultures. Like all reference models, it evolves every day as we acquire new knowledge through our own experiences and the successes of others.
Figure 2.2 Concept Diagram: Lean Business System Reference Model
Copyright © 2015, The Center for Excellence in Operations, Inc.
The remainder of this book reveals the architecture, principles, and best practices for creating your own signature Lean Business System. By the way, this is not a replacement for the Toyota House or TPS. Think of it as a major addition to the Toyota House and the TPS concepts, which are very important parts of a holistic, enterprisewide Lean Business System.
What is different about this next stage in the evolution of improvement? Adaptive systematic improvement is a higher-order human, sociotechnical system of improvement for the enterprise. The sociotechnical aspect is a dynamic system (a Lean Business System), a hybrid of art and science that recognizes the interaction between people, technology, and behaviors in terms of the structure and process of how organizations improve (and improve how they improve). The architecture of adaptive systematic improvement includes critical operating processes powered by a soul (i.e., Adaptive Leadership in Chapter 3) that keeps it in a continuous living state. Within the architecture is an integrated body of knowledge of traditional and emerging improvement methodologies. Adaptive systematic improvement is a combined strategy of Deming back-to-basics and other timeless fundamentals, innovation and creativity, the integration of enabling technology, and adaptive improvement across diverse industries and environments. It brings together both the historical fundamentals and the future competitive requirements into a powerhouse improvement capability for organizations. The goal of adaptive systematic improvement is to optimize the requirements of strategy, finance, technology, quality of life in organizations, and the broader social and competitive well-being of society. A systematic process is always in balance and not tilted toward one of the above requirements at the expense of other requirements. These combined characteristics create a superior operating system of improvement.
At first glance this might appear as an idealistic view of improvement, but this is becoming the international standard of excellence. It is alive and working well in several global organizations. However, for the majority of Western organizations this is a new management and operating process. It might exist in name, but it does not exist in daily practice as a natural cultural core competency—and it does not exist in terms of a formal improvement ROI and business value contribution. Adaptive systematic improvement is a very different and advanced operating system of improvement. It requires a huge leadership mindset change from the deterministic sequence of tasks, recipes, and tools-based approaches of the past to adapting a systems thinking approach to improvement. The leadership challenge for most organizations is to evolve, adapt, implement, and internalize adaptive systematic improvement as the cultural standard and expected code of conduct in daily thinking, behaviors, choices, actions, and interactions. The larger challenge is to create a culture that learns how to improve how it improves while doing all of this naturally and continuously.
The Lean Business System Reference Model provides a shared framework for designing, developing, and implementing best practices relative to adaptive systematic improvement. Why is a reference model approach valuable? A true, organization-centric Lean Business System is very complex and difficult to implement correctly but is much easier to sustain once the critical success factors are well-thought-out and incorporated into the total architecture. Much has been written about the Toyota Production System over the past decades. Much effort has been invested by organizations in attempting to achieve the same levels of Lean success. Several organizations have figured out the success behind the Toyota Way and have achieved the same impressive levels of success. Yet, globally organizations as a whole have a 20 percent batting average with Lean and continuous improvement in general. Today there is a significant amount of confusion and misinformation floating around about Lean and continuous improvement in general. Many organizations are convinced that a tools-based approach following the TPS recipe is the road to success. Others continue to believe that Lean and technology architectures are incompatible, which is a huge misconception and reason for failure. Coincidently the improvement tools by themselves represent about 20 percent of the factors of success. Leadership, a strong grounded culture of excellence, the moral soul and spirit of improvement, and the ability to adapt improvement systematically to a variety of evolving scenarios and requirements represent the 80 percent factors of success. Organizations tend to focus on the 20 percent and get some pieces of the total architecture right. However, when a Lean Business System is partially implemented, it functions at a low level of performance and is not sustainable for long. The word continuous always falls out of continuous improvement.
To help organizations through this journey to the next generation of Lean, we developed a reference model for adaptive systematic improvement. This reference model provides the total architecture and subprocesses for creating a for-real, forever Lean Business System. We have chosen to call our adaptive systematic process of improvement the Lean Business System Reference Model. It serves as the organization’s relentless, never-ending operating system of improvement. Figure 2.3 shows the overall architecture of this operating system.
Figure 2.3 Architecture: Lean Business System Reference Model
Copyright © 2014, The Center for Excellence in Operations, Inc.
A true Lean Business System is a finely tuned network of integrated and interdependent subprocesses working together. The Lean Business System Reference Model helps organizations to adapt the architecture, subprocesses, and underlying best practices to their own operating environments. The intent of our reference model is a design guide for Lean Business System success. Initially, the degree to which our architecture and its subprocesses are customized is a function of a specific organization’s business requirements and cultural development needs. There is some level of order to architect a systematic process of improvement and its subprocesses to an up-and-running state. However, the order is eventually replaced by a precise operating system that responds to time-based requirements. It is a highly intelligent and interactive management process, not a discrete and disconnected batch program model of improvement. Adaptive systematic improvement is more proactive, more predictive, and prevention-based. Every activity in every subprocess is requirements-driven in as near real time as possible. Adaptive systematic improvement is deliberate, efficient, and effective—and plans for and achieves breakthrough results. It is called adaptive systematic improvement because it is a formal, integrated system of how the most critical success factors of improvement work together to produce breakthroughs in performance. The integration of evolving technologies is moving plan-do-check-act (PDCA) into a more real-time sense-interpret-decide-act-monitor (SIDAM) model of improvement.
The reference model does not display evolving and enabling technology as a separate subprocess. However, technology is a key requirement and the underlying differentiator for adaptive systematic improvement, interconnectivity, and higher-order success in an enterprisewide Lean Business System.
The Lean Business System Reference Model is a very useful framework because it presents a true Lean Business System as an integrated system of leadership; strategy; and critical processes of improvement, people, and performance into a unified structure. The benefits of the reference model include:
A shared awareness and blueprint of the specific elements in the total architecture of a true, internalized Lean Business System.
An understanding of how the critical subprocesses interconnect to create an adaptive systematic process of improvement.
A reference point for rapid assessment of current Lean approaches and performance to a higher standard of Lean as an enterprisewide operating system.
A clarified understanding of new needs, design criteria, and architecture requirements to develop and adapt a Lean Business System in any global organization.
Information on how to align strategy, operating plans, and improvement to achieve best-in-class performance and superior business results.
The Lean Business System Reference Model can help any organization around the globe to develop an exceptional core competency of improvement and a higher cultural standard of excellence throughout the total value chain (i.e., customers, stakeholders, the enterprise, supply chain partners).
Following is a brief overview of the mission-critical subprocesses in our reference model architecture.
The “soul-building” elements of our operating system are leadership, vision, operating strategy, governance, and interventions. Adaptive systematic improvement requires leadership, discipline, structure, daily management, cultural acceptance, and clear evidence that things are improving for all stakeholders in order to generate continuous success. Leadership creates the vision, strategy, sense of urgency, recognition of the need, and culturally grounded rules of engagement for a successful Lean Business System. Leadership defines very specifically the overall purpose of the organization’s systematic process of improvement; the organization and reporting relationships; the dynamics of how improvement will be defined, deployed, and supported to business units and sectors; and how to manage and resolve conflicting priorities and barriers to change. It keeps our operating system in a healthy and living state through a continuous cycle of reckoning, renewal, enlightenment, and higher levels of organizational achievement—including cultural evolution. Finally, it keeps a balance between short-term financial performance and the overall well-being of organizations.
How is this soul-building achieved? Through Adaptive Leadership, a systematic form of leadership that continuously drives adaptive systematic improvement. (Note: We discuss Adaptive Leadership in detail in Chapter 3.) The soul-building function in adaptive systematic improvement establishes true constancy of purpose. Successful organizations have constancy of purpose as their operating foundation. For everyone else, this element replaces the temporary interest, wavering commitment, or token agreements that have been present in the stream of previous fad improvement programs. The best way to begin this adaptive systematic improvement journey is with an accountable executive steering group, a small highly skilled central support group for common and special development needs, and deployment leaders decentralized to business units. The initial objective of the executive steering group is to establish the strong momentum of adaptive systematic improvement by achieving significant breakthroughs within the first 90 days. At the same time, members of this group are innovating and architecting a longer-term, requirements-driven, and culturally grounded systematic process. Organizations that think and casually lead improvement initiatives in terms of years achieve questionable results or fail outright. This is a big change from the big-bang fad improvement programs with their huge dedicated Lean and Six Sigma departments and the bureaucracy of resources and questionable value that have been commonplace for the past decades.
The subprocess of aligned improvement strategy serves as the perpetual hopper of strategic issues or detractors from superior performance and the organization’s respective requirements for improvement. The most important operating characteristic of this subprocess is how the customer, market, and overall competitive environment is scanned, and how the right improvement opportunities and requirements are identified. Aligned improvement strategy is just that; it is always up to date and on point, and it constantly prioritizes and distills broader strategic improvement themes with more specific improvement objectives.
One of the more familiar approaches to accomplish this is hoshin kanri or simply policy deployment. Originally used in Japan in the 1950s, it serves as an annual management system where all employees participate in identifying key business issues, defining a vision and goals of improvement, establishing quantifiable goals, defining supporting tactics to facilitate success in each initiative, and defining performance metrics. The result is a large set of standardized hoshin tables that show each improvement goal and its supporting strategies for success. These tables are typically reviewed and updated on a monthly basis. Hoshin kanri works brilliantly in Japan’s patient and meticulous attention-to-details industrial culture.
Like other improvement tools, many Western organizations have installed hoshin kanri into their Lean or continuous improvement initiative. Most organizations spend more time being puzzled with how to fill out the templates and matrices than actually understanding the spirit of the methodology. Many organizations have their matrix sets and symbolic A3 reviews to encourage people to be brief and to the point. By the way, why use an A3 international paper size (297mm by 420mm) that is not even used as a standard paper size in the United States? Wouldn’t the sensible thing be to use U.S. B size paper (11 inches by 17 inches)? It folds nicely into our standard A size format. How about redesigning the content to fit our spirit of a U.S. systematic process of improvement? Copying and imitating a methodology based on a fixed set of templates and an international paper size to constrain decision making seems almost obsessive. Furthermore the sheer time it takes to keep all of the matrices and templates updated can become a detractor (or take the place of) improvement in Western cultures. Fact is, it is difficult for most Western organizations to actually use hoshin kanri naturally as a living strategy of adaptive systematic improvement. The methodology of hoshin kanri is sound for sure. In a systematic process Western organizations should be asking themselves what the best implementation of hoshin kanri is for their specific business requirements and organizational culture. The answer is to adapt the methodology to Western culture with more focused and nearer-in goals, and simplified tables and templates. We have developed a “MacroCharter™” and “MicroCharter™” methodology which we share with you in Chapter 4. The MacroCharter and MicroCharter methodology translates the essence of hoshin kanri into a simple, easy-to-maintain improvement planning and deployment process. While it is not as administratively elaborate as hoshin kanri, it keeps the right improvement objectives and details in front of the organization, and it incorporates a continuous closed-loop process of monitoring and measuring progress.
This subprocess of the living deployment plan provides a level of detail below the aligned improvement strategy. In essence, it is the subprocess of how broad opportunities and needs are broken down into smaller but very specific and assignable-ready improvement activities. The living deployment plan is a laser-targeted plan in which the attention is always on the vital few issues that yield breakthroughs in improvement rather than the trivial many issues that end up as improvement for improvement’s sake. This subprocess ensures the detailed planning and definition, prioritization, alignment, and control of released improvement activities and their respective teams and limited resources. This subprocess also regulates the amount of improvement activity in the right areas, thus providing sufficient capacity to execute quickly and successfully. There are essentially four parts to this subprocess of adaptive systematic improvement:
1. Translate broader strategic improvement themes into smaller manageable improvement activities using our MicroCharter methodology. The primary focus is more near-in prescriptive, but the reality is a mix of quick and longer-term efforts. The objective is to break the larger improvement themes into many smaller, simpler, time-phased, and rapidly executable improvement activities.
2. For each planned improvement need, define the specific problem statement, objectives and scope, baseline performance (metric and level), improvement goals and objectives, expected deliverables and timing, entitled benefits of success, executive and/or process sponsor, resource(s) or team leader and team (if necessary), and a go-forward plan, including a Gantt chart (a type of bar chart that graphically describes a project schedule). Note that this step and step 3 below are performed concurrently to acquire enough information for decision making, but to avoid non-value-added definition efforts for activities that land further down the priority list.
3. Evaluate and force rank the relative value contribution of planned improvement activities in the MicroCharter relative to key attributes (revenue growth, cost reduction, cash flow, quality improvement, customer need, time, resources, cost, risk versus rewards, capital requirements, complexity, dependencies, etc.). This is a process of separating the vital few from the trivial many, where the most achievable, highest-impact opportunities move to the top of the list. This seems like a lot of up-front work, but it provides much clarity and reduces the required cycle time to complete improvement activities by 50–75 percent or higher.
4. Organize and release improvement activities, and monitor weekly progress. The MicroCharter serves as a living planning and deployment methodology because it is directly linked to the MacroCharter. The MacroCharter and MicroCharter are always updated and synchronized to align with broader business issues and requirements. There are no waves of lengthy projects in a systematic process; improvement activities are managed by priority and capacity, and each begins and may reach completion at a different time.
This element of our operating system introduces a major change to improvement planning and deployment from the historical batch, wave, train the masses, full widespread rollouts of improvement programs in organizations. Organizations were anxious to improve and hoped that throwing enough improvement tools at the ceiling would cause something to stick. Associates were also eager to respond with demonstrations of what they were asked to do. In retrospect, executives overloaded their entire organizations with too much mandated incremental improvement. The process of improvement replaced the original objectives of improvement, and the program eventually dwindled away or stepped aside for the next silver bullet program. It is nobody’s fault. This was the standard accepted protocol and process for introducing improvement in Western organizations. This subprocess of systematic improvement recognizes the organization’s realistic capacity to improve and responds to this reality with smaller and well-scoped improvement activities and a regulating feature to manage the realistic capacity for executing with great results. Adaptive systematic improvement requires that organizations reinvent the process of how they improve, wrapped around their specific business issues and culture. By now, the reader should recognize that a systematic process of improvement requires a major overhaul in the traditional Western approaches to improvement.
The subprocess for changing awareness, communication, reinforcement, and management is the most overlooked and oversimplified factor in large-scale improvement initiatives. In many cases it is a poorly conceived mechanical procedure to disseminate information, often creating more confusion than clarity of purpose and missing the mark of its intended objectives and spirit. In a systematic process, these factors—change awareness, communication, reinforcement, and management—are the fuel, lubricants, maintenance, and customer service that keeps the soul of improvement alive and at attention at all times. This subprocess most directly influences the defining, creating, nurturing, and reinforcing of the right improvement Kata. The rate of Kata’s development is directly proportional to executive behaviors, choices, and actions—and how well executives communicate, engage their people, and act as the greatest role models.
The purpose of this subprocess is to create awareness, commitment, trust, inspiration, engagement, and other positive behavioral and cultural attributes of excellence. These factors help to deal with the invisible human drama of change that we cannot see in the data and metrics. Organizations are complex entities in which leadership actions can unintentionally transmit the wrong signal about improvement or other priorities.
This subprocess of our operating system builds the human and emotional foundation for improvement and change. There are two simple thoughts to remember about communication:
The strategy that the CEO and executive team choose to communicate the message about improvement and change (e.g., what, when, why, where, how) significantly influences the initial recognition of the need, receptivity, and acceptance on the part of the organization.
The process, content, candor, method/media choices, and frequency of communication significantly influence ongoing awareness, proactive participation, reinforcement, and internalization of change. This determines the “continuousness” of the effort.
Why is the most important question to answer. People need to understand and internalize the urgency and recognition of the need to change and the consequences and risks of staying the same. They need to know what to expect if the organization does not change—particularly at the individual level.
People need constant renewal and recognition about their stake in improvement. The practices and media to support effective change awareness, communication, reinforcement, and management must be deliberately designed and adjusted based on organizational issues and needs. We provide additional guidance on change awareness, communication, reinforcement, and management in Chapter 6. One design criterion that is important in this area is how to design and deploy these factors to different parts of the organization. A pretentious gemba walk, a company newsletter article, an e-mail blast, or an occasional video is not enough to achieve success.
Every systematic process of improvement requires a standardized education and continuing professional development function. This is not the typical attend the course, check the box, get the certificate operation. This is the organization’s “improvement boot camp,” where the right success-enabling thinking, skill sets, and behaviors are created, delivered to the organization, and continuously reinforced. This subprocess helps to develop a uniform body of knowledge and operating guidelines for everything from the specific improvement methodologies, tools, and applications to more advanced analytics, teaming and group dynamics fundamentals, change of leadership and management, performance management, basic finance and cost analysis, technology and integration, business process fundamentals, nonlinear improvement methodologies for accelerating innovation, and other skill sets necessary to support an evolving systematic process of improvement.
Remember, it is important to visualize the interaction of all of the subprocesses in our operating system. For example, the initial education and professional development needed to support a systematic process of improvement are best determined by the specific improvement activities and their supporting tactical requirements in the MacroCharter and MicroCharter. Prior improvement programs have included a “train the masses on everything” approach, whether it was relevant or not. Our operating system is always in tune with development needs and delivers more targeted education continuously on a just-in-time basis. This creates an achievement-based (versus attendance-based) education where associates learn, apply, and experience success in a quicker cycle. The operating system ensures that this cycle is continuous, so improvement is continuous.
The concept of a center of excellence is to be the education and talent development entity of our Lean Business System. The purpose of the center of excellence is to provide leadership development, design and deliver technical and soft skills education, create new methodologies for new situations, provide education and talent development regarding cultural evangelization, build a best practices benchmarking knowledge system, and conduct external research on specific topics of need. A center of excellence develops both talented corporate citizens and talented improvement associates. This is the subprocess of our operating model that plans, executes, and monitors this monumental effort of standardization and uniformity in the various improvement methodologies across all business units of the corporation. Often, organizations set up satellite centers of excellence in larger business units to work with the division executive and lead deployment executive.
A critical success factor in a center of excellence is customization: providing professional development that is tailored to, aligned with, and success-enabling to the organization’s strategic issues, operating plan, and cultural and organizational development needs. We have talked previously about the need to return to an integrated body of knowledge for our adaptive systematic improvement operating system. There are many different types of improvement opportunities in organizations. Some are simple, while others are complex. A center of excellence education typically includes (but is not limited to) a much wider variety of these topics:
Leadership and management development (e.g., company policies and procedures, best practices of leaders and managers, planning, controls, metrics, mentoring and coaching, and handling difficult situations and disciplinary policies).
Teaming and soft skills education (e.g., teaming fundamentals, group dynamics, communication, barrier resolution, change management, virtual teaming).
Lean enterprise (with more focus on business process improvement and transactional process improvement).
Six Sigma (basics, intermediate, advanced) and other process analytics to support all improvement activities with fact-based and data-driven approaches.
Technology-enabled improvement—e.g., enterprise resource planning (ERP), Internet, business analytics, data visualization, mobility and cloud technology, and business process fundamentals.
Nonlinear improvement methodologies (e.g., mind and dialogue mapping, prioritization grids, affinity diagrams, free-form value mapping, worth factor analysis, abstraction analysis, risk and decision tree analysis, simulation, and modeling).
We provide more guidance about how to establish a center of excellence with the right improvement methodologies and talent development-enabling content in Chapter 7. For those with a fascination for tools, they are presented in this chapter as an integrated body of knowledge. Initially, a seasoned improvement expert can review the details of the MacroCharter and MicroCharter and define a basic body of knowledge required to enable a systematic process from a talent and execution standpoint. These components of our operating system are dynamic and needs-based; one can never sit down and define the full scope of talent needs and educational offerings because they are ever-evolving with internal progress and external influences. Organizations require constant injections of new skills in this operating system. They are always needs-driven and evolve as new and uncovered situations arise or as business improvement requirements evolve over time. In Chapter 1 we mention that the largest opportunities are the ones that are not known yet; the talent and specific improvement methodologies may need to be developed to deal with these unknown opportunities.
The objective of the subprocess execution and talent development is to replace “broad improvement for improvement sake” efforts with precisely regulated, high-impact activities that are completed efficiently and that produce rapid results. Infrastructure includes the set of standard rules about how projects are launched, tracked, completed, measured, and archived: in essence “execution.” Several organizations have set up a searchable improvement intranet to avoid duplicating previous work of other teams or to leverage their documentation, analysis, and lessons learned. Another objective of this subprocess is to replace the “train the masses in everything, get the belts” mindset with a very specific and deliberate professional talent development plan based on the true requirements of the company (e.g., develop and expand the “go-to” champion talent pool). This subprocess also ensures that continuous improvement is a “pull” into business units based on defined needs rather than the traditional centralized “push” (i.e., throw everything at the ceiling and hope something sticks) out to the entire organization.
An important component of this subprocess is Scalable Improvement™. This is a more adaptive “middle out” model of improvement. Our Scalable Improvement model adapts the process of improvement to the organization, its culture, and mission-critical success factors. It’s all about continuously defining the organization’s 80-20 sweet spot of opportunities and then navigating through the barriers to success while developing internal talent and “internalized” participation and momentum. This approach builds a true, permanent, cultural standard of excellence in how people think and work. Scalable Improvement is a laser-targeted, rapid deployment, and rapid results model that eliminates all the non-value-added waste that exists in traditional approaches to improvement—the waste that kills improvement initiatives and makes it nearly impossible to keep the word “continuous” in continuous improvement. Scalable implies a living cycle of developing improvement talent in small increments—giving people just what they need at the right times in order for them to achieve success, and then repeating the cycle at a higher order of learning. The model is also designed to position organizations quickly in a positive self-funding mode with their strategic improvement initiatives.
We also use a process of daily check-ins with critical resources to stay on top of progress and intervene as necessary. This intervention is mentoring and technical support, not undermining the engagement and empowerment of individuals and teams. It is helping individuals and teams to become committed to improvement naturally (spiritually by Toyota standards) by experiencing multiple successes efficiently and the personal growth inherent in making a difference in the organization.
This subprocess of performance reporting and measurement is straightforward, but can be a severe weakness in most internal improvement initiatives. In some cases, the management pressure to produce results while skipping all the other important ingredients for success can spur a host of funny money savings games. To start off, a number of factors drive behaviors in organizations: beliefs, perceptions, values, emotions, politics, safety and security, observations, messaging, motivation, underemployment, and a number of other factors. The purpose of performance reporting and management is to align behaviors with the organization’s mission, vision, and purpose. This is a balanced set of metrics that maintains somewhat of a controlled process in our operating system. Reality introduces changes daily, and success is a function of how these changes are sifted through and acted upon. There will always be noise in our operating system and in all other complex systems.
There are several caveats about measurement system analysis worth mentioning:
Organizations cannot manage what they cannot measure.
What gets measured gets attention, even if it is pointless to measure and manage it.
Organizations must make sure that they are measuring and communicating the right things.
Measurements change behaviors and establish priorities in the right or wrong directions.
Measurements create the right enabling behaviors, which lead to the right enabling actions for achieving the right enabling results—and the inverse is also true.
Be careful what you measure because you just might get it.
In the absence of measurement, everything is fine.
The need for performance reporting and measurement is evident in a systematic process of improvement. The most important role is that it provides instant closed-loop feedback to the business and to all the other subprocesses of our operating system so it becomes a true Lean Business System. Contrast this attribute to improvement programs of the past and present. I have observed where it required a special finance project to go out and determine the costs and benefits of Lean programs. Most organizations do not know the ROI on their improvement efforts but can mention a few significant accomplishments. Previous Lean, Six Sigma, and other continuous improvement initiatives might have started out publicizing successes, but most of these fad programs became “fly by night” programs. See the difference in a systematic process? Performance reporting and measurement continuously interact with other subprocesses of our operating system. In effect, this subprocess is validating that the content of the MacroCharter and MicroCharter is happening and moving the business positively toward its strategic and operating intent. This subprocess is involved early on when proposed benefits are being planned and estimated. It is involved during in-process improvement activities to assist teams in standard financial assumptions and calculations (to avoid incorrect financial assumptions, double counting, and funny money savings). Finally it serves as the verification of results achieved. Our operating system allows executives and their organizations to sense, interpret, decide, act, and monitor (SIDAM) the value contribution of their XYZ business system on the spot and adjust the subprocesses to realign desired outcomes to customer, business, and talent needs.
This subprocess incorporates several levels of improvement (which are not listed in order of priority):
Individual/team performance, where improvement is an important criterion in performance reviews.
Activity and project performance, a postmortem of all improvement activities with lessons learned formally integrated into future efforts.
Organizational and cultural adaptation, an attribute-based evaluation to assess the degree of acceptance and internalization in the way people think and work every day.
Effectiveness of the overall Lean Business System on strategic performance, including consolidated value contribution by strategic objective, functional area, budgeted improvement achievement, and overall rate of improvement.
Business and operating performance, a formal pegging process of improvement activities to individual accounts in top-line customer and/or market growth, profit and loss (P&L), cash flow, and measures within other financial ratios (asset turns, operating leverage, cash-to-cash conversion, EBITDA, etc.).
Without going into more details, it is assumed that recognition and rewards go hand in hand with performance management. At any given time, this subprocess provides information about projects completed, projects in process, planned and prioritized projects, accumulated benefits and rate of improvement, adaptability by organizational function, and direct linkage of activities to financial impact in the operating plan. Several organizations incorporate a planned level of improvement into their budgeting process. As we mention above, performance measurement and reporting close the loop in the overall systematic process of improvement, enabling organizations to continuously improve how they improve.
Our Lean Business System Reference Model provides a thorough and extensive guide for success. The reference model also incorporates four formal and extensive assessments to determine gaps and probable causes between current and best practice XYZ Lean Business System performance:
1. The Adaptive Leadership Assessment. An evaluation of how well leadership adapts to changing conditions and builds an improvement-enabling, Kata-compatible culture through their own daily behaviors, choices, and actions.
2. The Architecture and Operating Practices Assessment. An evaluation of the performance of architecture subprocesses in the reference model, and how well these elements work synchronously to create an adaptive systematic process of improvement.
3. The Organizational Design and Dynamics Assessment. An evaluation of the present organizational structure and operating norms, and the ability to naturally integrate distributed authority, stakeholder engagement, empowerment, and Kata development into the culture.
4. The Improvement Kata Assessment. An evaluation of the relative existence and strength of the right, improvement-enabling aligned behaviors and cultural attributes of a true and continuously evolving Kata-based culture.
These assessments help to design, measure, and analyze how well an organization’s XYZ Business System is working relative to strategic, operational, financial, technology, and cultural development needs. Keep in mind that as a reference model, these formal assessments are a continuous work-in-progress based on new learning and future requirements.
Recognize that the reference model is a guide, not a tool or practice to be mimicked. Adaptive systematic improvement is a complex management system, and it requires architecting by the right skilled design professionals. However, it is not another improvement bureaucracy that requires years of effort before an ROI is achieved. A well-designed, organization-centric Lean Business System is an endless journey to quantum levels of excellence that organizations have not yet discovered. There are also plenty of known immediate opportunities for improvement where organizations can achieve breakthroughs in improvement within the first 90 days or sooner.
A true Lean Business System and its subprocesses must be designed around a specific organization’s business requirements and cultural development needs. Adaptive systematic improvement is a deliberate design with a highly integrated operating system and high expectations for results. Most organizations lack a formal and deliberately designed and operating Lean Business System as we have outlined. When developing this operating system, appreciate the detailed design architecture of adaptive, systematic, process, and improvement mentioned throughout the chapter. The most critical subprocess is at the center of our total architecture: leadership, vision, operating strategy, governance, and interventions. Building this operating system requires a systematic leadership model as well—one that continually builds the soul, vitality, and robustness that enable the Lean Business System to operate as a living whole. These leaders typically understand how to maintain a delicate balance between operational and financial performance and building an organization that acts as a big team, a big family. Figure 2.4 provides a general overview of adaptive systematic improvement.
Figure 2.4 Adaptive Systematic Improvement Process
Copyright © 2015, The Center for Excellence in Operations, Inc.
Note that the goals include many goals that are different from the normal list of leadership roles and responsibilities. Let’s save the details of this leadership style for now. We refer to this systematic leadership model as Adaptive Leadership which we cover in great detail in the next chapter. The means of success is our Lean Business System. The outcomes are much bigger and bolder than the results from previous improvement programs.
The purpose of the Lean Business System Reference Model is to stimulate thinking and dialogue and provide guidance toward a true, holistic and organization-centric Lean Business System. The scope of the reference model includes the enterprise and extended enterprise, particularly collaborative improvements within the network of global customers and suppliers. It is a reference model, and it is perfectly acceptable to agree, disagree, modify, or add content to create a better fit within your own organization. It takes a very special kind of leadership to see a systematic process of improvement through design to daily work. It’s easy to launch a few improvement programs and achieve some positive results. It’s a different animal to transform culture to a higher spirit of improvement that resembles a religious or sophisticated military movement. This is the challenge of growing your organization to be a Toyota—or superior to Toyota. Several Western organizations like GE, Honeywell, Emerson Electric, Deere, and others have made the grade. This is the future of improvement—a living systematic, technology-enabled, culturally grounded operating system of improvement. A natural, higher-order, and well-functioning Lean Business System will produce more benefits for an organization (hands down!) than any other approach to improvement to date. Because it is adaptive and living, it continuously evolves to enable new and often unknown opportunities for improvement.
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