Hierarchy is Killing Your Business

Most organizations still have a hierarchical, command-and-control organizational structure, sometimes called “smoke stacks” or “silos.”  A hierarchical organization has more defined roles, procedures, and lines of communication. Typically, there is a chain of command which needs to be followed. The functional specialists in charge of each smoke stack tend to focus on optimizing their own functional area, often to the detriment of the organization as a whole. In addition, the hierarchy gives these managers a monopoly on the authority to act on matters related to their functional specialty.  The combined effect is both a desire to resist change and the authority to resist change, which often creates insurmountable roadblocks to Lean improvement projects.

A hierarchical organization can be compared to a totem pole. The least important employees, generally those who earn the least with little responsibility and little input into company decision making, are at the bottom of the pole. The top of the pole includes the owner of the business, CEO, or other major players in the decision making process of the company. In between the low men on the totem pole and the top men is everyone else in order from the least responsible to the most responsible. Each step upwards on the totem pole generally offers higher pay and more responsibility.

Too many levels of hierarchy have disadvantages:

1. Too Rigid. Organizations need to be able to adapt quickly to changing market conditions. Put simply, a hierarchy can’t handle speed well. Rules and procedures that inevitably accompany hierarchies almost never change fast even if they are now irrelevant, overly burdensome, and the like. Hierarchies can’t jump to the left or the right easily, and over time it’s easy to keep adding levels and rules, to keep making silo walls thicker.
2. Stifle Innovation. In a hierarchy, there’s a process for everything, and usually these processes are followed to the letter. Innovative organizations, however, are always questioning the status quo. They ask: “How can we do this better?” which often results in a sudden change in direction. Hierarchies simply aren’t built this way. If action is going to be taken, it has to be built into the plan a year ahead of time.
3. Poor Communication. People in hierarchical structures tend to want to approve communications as they pass up and down the hierarchy. This can cause delays and confusion. A manager may not get to an email for several days and may then offer an opinion or place a restriction that kills the communication altogether. The sheer amount of time a directive can take to reach employees from the head office can cause costly delays.
4. Slow Decision Making. Decision-making is usually slower in hierarchical structures because responsibility and authority are concentrated in a few people at the top. The hierarchical system places limits on the responsibility and authority of individual employees, which reduces an organization's ability to adapt to dynamic business conditions. Although a command-and-control hierarchical system might work well in a crisis, it is of limited help after the crisis is over.
5. Little Empowerment. In a rigid hierarchy, the people who deal directly with customer problems may have the least authority to solve them. The higher on the rung the manager is, the more distance she may have from the customer. The rules of a hierarchy require that higher-ups approve decisions, and this can mean that people in the field or at the front counter may not be able to move quickly to respond to customer needs.

The more layers and levels of management, team leaders division heads, etc., that you have in your company, the more challenging it becomes for information to travel throughout the organization, and the more people are likely to become territorial. By keeping the layers of information to minimal we can empower people to provide solutions and to be directly attached to all of our company goals.

Every employee should be empowered to act independently in the best interests of the company and our customers. Teams should be trusted to work together to find the best possible solutions to problems – and to put them straight into action.

"Everybody Get Lean" - Learn From Mistakes and Miss-Steps!

Riley Sweeney, from Uttana,a Lean training video company sent me a video of great comedic webseries "Everybody Get Lean." The series is a work place comedy about lean programs and everything that can go wrong when people go overboard. They shot a total of four episodes, though only the first one has been released. If it picks up steam then they will be making many more. 

Kaizen is not easy and involves total commitment and total involvement of everyone in the organization. Ultimately, everyone needs to support Kaizen to be sustainable. See and learn how this group of people don't get it and apply Lean and Kaizen in the wrong manner with hilarious consequences! Watch the antics of the Expira office team as they go astray on their Lean journey. But learn from their mistakes and miss-steps! 

Learn how to do Lean the right way at http://uttana.com

10 Signs of a Non-Lean Manager Who Disengages the Workforce

Companies with poor management practices typically have employees who are disengaged. While a disengaged workforce is a symptom of substandard leadership, just what constitutes bad management? Here are a few problematic practices and signs I believe should be axed:

1. Bad Communication

Few things cause employees to tune out faster than a management team that keeps the company's future direction to itself. Successful Lean leaders see the larger picture and will share the vision.

2. Team-Building that Isn't

Fostering a connected team is an important practice, but before implementing group events and activities, be sure members of your team won't feel left out. Getting to know your team members is generally an effective way to build collaboration and a sense of joint purpose.

3. Little or No Training

According to a 2011 report from Accenture, 55% of workers in the U.S. say they are under pressure to develop new skills, but only 21% say their companies have provided training to learn those new skills within the last five years. Training is a lever that changes the rate of improvement you can achieve.

4. Preventing Follow-Through

Most employees like to feel their work has meaning. If they don't get this kind of satisfaction, they lose motivation, according to a number of research studies. One sure way to demean an employee's work is to move them off a project before it's completed. Lean leaders must follow-up on employee ideas.

5. Ruling by Fear

Managers who rule through rigid control, negativity, and a climate of anxiety and fear don’t trust that they can get things done any other way. Of course, it backfires in the end because fearful employees won’t bring up new ideas for fear of being attacked and won’t be honest about problems. Moreover, very few great people with options are going to want to work for a fear-based manager.

6. A Failure to Develop Others

Leaders who are not concerned about helping their direct reports develop and are not seen as coaches or mentors are highly likely to fail. Primarily focused on themselves, they are not concerned about the longer-term success of their employees or their department.

7. Failure to Improve and Learn from Mistakes

Arrogance and complacency combine in the poorest leaders as they rise, causing them to come to the dangerous conclusion that they’ve reached a stage in their careers where development is no longer required. Closely connected to this failing is an inability to learn from mistakes, leaving these unfortunates to repeat the same ones over and over.

8. Failure to Walk the Talk

Saying one thing and doing another is the fastest way to lose the trust of all your colleagues. The worst offenders here also pose a wider threat as dangerous role models — creating the risk that their organizations will degenerate if others behave as they do.

9. Lack of Data

Many managers rely on gut instinct to make important decisions, which often leads to poor results. On the contrary, when managers insist on incorporating facts and evidence, gathered from direct observation at the source they make better choices and their companies benefit. Lean companies however strive to empower their employees to make decisions at all levels through access to data, knowledge of evaluation methods, and defined standard processes.

10. You Always Have Emergencies

Business is sometimes unpredictable. But the fact that things are unpredictable is, well, predictable. As a Lean manager, it's your job to assess the situation and plan in advance. Occasional emergencies are understandable, but constant ones mean that you're not doing what you need to do. Sometimes that involves pushing back against your superiors and protecting your people. It means scheduling according to actual needs, and if you don't have the budget for that it often means changing the definition of need.

Hopefully, your manager or company executives do not exhibit these faults. Perhaps understanding the signs on non-lean leaders can better help us recognize those of Lean leaders. Those managers who truly know Lean understand the benefit comes from developing people to think and improve their own process the more they define the role as influencing or coaching. A Lean leader must be relentless in teaching and expecting learning through actual practice.

10 Signs of a L.A.M.E. Company, Not a Lean Company

Unfortunately, there are many examples of Lean mistakenly implemented. A few years ago Mark Graban, blogger at Lean Blog, coined the term "L.A.M.E." — Lean As Misguidedly Executed. L.A.M.E. includes those things that people call "Lean" but really aren’t a good representation of true Lean mindsets and practices.

In order to fully understand Lean and establish the success that can come from truly applying the right thinking it is importance to know how it contrasts with L.A.M.E. The following 10 items are signs of a L.A.M.E. company not a Lean company.

1. Slashing the workforce.
When organizations use lean methods to drive layoffs, this would be an example of L.A.M.E., not Lean. Slash-and-burn approaches send shock waves that affect the remaining workforce. Lean is based on dual ideal of continuous improvement and respect for people. Downsizing is penny-wise and pound-foolish not respectful.

2. Lean is to blame for poor performance.
Low inventories are commonly linked to Lean because many organizations are able to reduce inventory levels due to practicing Lean Thinking. But "true" Lean Thinkers understand lower inventories are a resultant of a process improvement not a solution to a problem.

3. Customers complain often.
Customer responses to your company reflect their treatment by employees, particularly your front-line staff. A lot of complaints means that the customer focused culture you’ve tried to create has either not reached everyone or seems so contrived that customers are dissatisfied rather than delighted.

4. Talented people giving average performance.
Talented people want to deliver great results, not only for your business but also for them. If your star employees are delivering average sales, productivity and profitability, they are not getting what they need from you. Invest in your employees by cultivating continuous learning and improvement.

5. Issues are repeated.
If you hear about the same problems over and over, it's likely that there is little or no effective action being taken to deal with them. This is an indication that there lacks a PDCA approach to problem solving and continuous improvement is probably more like firefighting.

6. Feeling overwhelmed.
No matter how hard you work or how fast you work, you never even come close to getting everything done. It just seems like you've always got too much work and too little time. So you're forced to make one of two unhealthy choices: to either let some work go or let some work get done more poorly than you would like. This is a lack of respect for people.

7. Lack of appreciation.
And this, of course, is one of the worst possible ways to manage or motivate a workforce. Employees at all levels need to know that other people have noticed their good work and have commented on it. Without verbalized appreciation, feelings of "what's the point" and "why bother" start to take over.

8. Disengaged workforce.
Your disengagement can be caused by several things. Your organization may have gone through a huge amount of change but didn't give you any training to cope with the change. So you feel less confident of your abilities. Or the disengagement may have come about because your organization never bothered to learn your strengths or tap into your strengths. Allow employees the opportunity to participate in the business.

9. Hoarding information.
Some people withhold information from others because they know that knowledge is power. And they only share their information when it suits their purposes. In fact, many employees believe their managers know a lot more about the business than they're telling. Remember knowledge is the primary lever that can affect the rate of change in any organization.

10. Unsustainable Results
If a company is focusing on implementing a checklist of tools and processes then they do not understand Lean is about the thinking. These companies are trying to copy and paste solutions that will not fit their needs. I would have to say they are practicing L.A.M.E. if results are not sustaining. A Lean company values standardized work and when implemented the results have a much higher chance of being sustained.

Sometimes it can be hard to tell if a company is Lean or L.A.M.E. For many of us these signs are clear from experience. What other L.A.M.E examples have you seen others claim as Lean?

Lean Blamed for Perils at John Deere

An article at Bloomberg Businessweek entitled low inventory angers John Deere customer caught my eye this week.  The article's author writes of the perils of running lean, claiming that lean is the cause of John Deere's customer service problem.  This strikes me as another unfortunate example of L.A.M.E. not Lean. Mark Graban coined the term "L.A.M.E." — Lean As Misguidedly Executed. L.A.M.E. includes stuff that people call "lean" but really isn't a good representation of true Lean mindsets and practices.

The article states that while lower inventories have helped the company meet short term financial results it has led to shortages in the supply chain.

In recent years, Deere has been focusing on becoming a build-to-order company. That bolstered prices and profit because keeping smaller stockpiles on hand reduces the amount of materials and working capital a company needs. But production cuts and the tightest inventories in the industry have led to a shortage of Deere equipment as the farm economy is strengthening. And that's pushing customers ….toward competitors.

Unfortunately the lower inventory levels will result in lost profits and market share.

Deere shrank its inventory 28% in the 12 months ended on Jan. 31. As a percentage of sales in the most recent reported 12 months, Deere's inventory was just 12.3%, the lowest among 15 farm and construction equipment makers, including Agco and Caterpillar. Fewer products have big implications for the company's dealers. "It means I am losing market share," says Larry Southard, co-owner of a central Iowa dealership that gets 90% of its sales from Deere gear. He figures his dealership's sales would be up to 20% higher this year if it had enough inventory to meet customer demand and products were shipped more quickly. "I suspect we can lose at least half a dozen deals a month," Southard says.

It appears the company has used their resources to focus on innovation.

Ken Golden, a spokesman for Moline (Ill.)-based Deere, says the manufacturer's "intense focus" on managing inventory has improved its financial performance and has allowed it to design better products for customers.

The company seems to have misjudged the market by not understanding the voice of the customer.

Deere Chief Financial Officer James M. Field said on a Feb. 18 conference call that the company had been too pessimistic about the effect of the global recession on North American farmers. In November, Deere predicted its net sales would decline about 1% in the year ahead after dropping 19% in the 12 months ended Oct. 31. Deere expected production tonnage to decrease 3%. In February the company revised its outlook upward, forecasting sales to increase up to 8% in 2010 as gains in farm cash receipts rise far more than expected.

It is not clear whether the author only or whether the author and John Deere doesn't understand Lean.  Lean is often mistakenly to blame for poor performance.  Low inventories are commonly linked to Lean because many organizations are able to reduce inventory level due to practicing Lean Thinking.  But "true" Lean Thinkers understand lower inventories are a resultant of a process improvement not a solution to a problem.

Now, we all understand that high inventory levels hide problems.  The same is true in this case.  While higher inventories might have met some short term demand at a higher cost, the real issue is related to poor understanding of the market.  John Deere did not fully understand what they needed to produce.  I think it would also be safe to say that the cycle time to produce their product is too long compared to the level of inventory and changes in market demand.  They simply can't keep up.  This is not a failure of Lean but rather a failure on not using Lean.  Lean is about understanding the customer demand, building to that demand efficiently via binary connections in your supply chain, and recognizing abnormalities so you can quickly react and solve problems.

Time will tell whether John Deere understands Lean and how they choose to react to this opportunity for them to exceed their customer's expectations.  For now, this can serve as a lesson for all of us to learn from.  Low inventory levels are not Lean.  Making your customers happy by meeting their demands is Lean.

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