Control or cooperate?

Pick any lean tool. What do you intend with it? Take Just-in-Time, for example. Do you mean to use it to control the amount of inventory you have in your supply chain or to make sure the different parts of the chain cooperate better with each other?

Take time study at a workstation: with it, do you intend to check that the operator is following the standardized work exactly or do you wish to have a conversation with them about their difficulties with the work and the ideas on how to make the job easier?

Don’t dismiss this question too quickly. Kiichiro Toyoda formulated the concept of Just-in-Time as he set out to realize his belief that “the ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste.” He conceived methodologies and techniques for seeing waste between lines and processes so that people could collaborate in eliminating it.

Similarly, the andon’s stop-and-call at the sight of an abnormality starts with a check of the standard work. This is not meant to control that the person correctly “follows” standards, but to check there is a common understanding of the standard. This is why lean thinks in terms of loss functions and boundary conditions: “OK or not-OK” is not about someone doing something in the right or wrong way, but about ensure there exists a shared understanding of what is normal vs what is abnormal. This fundamental insight turns the hierarchy from a chain of command to a chain of help – and is a true source of cost reduction, as it progressively eliminates defects and rework.

The origins of management theory are often traced back to Frederick Taylor’s “scientific management”, which aimed to replace every rule-of-thumb practice with “scientifically” determined work instructions. Engineers would observe the work, determine the “one best way” and then ensure worker compliance with these work methods. In the 1920s, this subordination of the people who do the work to the people who design it was further reinforced by the managerial adoption of Weber’s theories on bureaucracy: the vertical chains of command-and-control, punish-or-reward, and promote those who dutifully follow instructions and procedures. Subordination theory (you accept to obey instructions, follow procedures, and be punished or rewarded by your manager for pay) developed the twin components of technocracy (experts design the best system, the rest implement) and bureaucracy (executives give instructions in silos, the rest comply and report). This model became completely dominant from the 1970s onwards, prompted by Milton Friedman’s exhortation for business to only focus on making profits and activist funds’ obsession with controlling executive behavior through outsized financial incentives.

However, at that time, the mainstream view of the firm was Chester Barnard’s looser theory of cooperation. In this approach, the main role of the executive is not to ensure subordination, but to coordinate people’s efforts towards achieving a common goal. This means prioritizing the communication system over the formal organization and securing essential services from members according to their own aims and demands. The set-up should balance effectiveness (getting the job done at lowest cost) with efficiency (making sure the unintended consequences of getting the job done would not become overwhelming by ensuring that each participant finds their own personal benefit in participating).

All but forgotten now, Barnard was very influential in management circles in the 1940s. He is seen as the first proponent of a general theory of collective action and a key influence on Fritz Roethlisberger at Harvard and John Dickson of Hawthorne Studies fame. Barnard was also a mentor to Herbert Simon, a key architect of post-war organization theory. Barnard saw organizations as systems of cooperation depending on the willingness of subordinates to accept the authority of their supervisors, according to the meaning and personal benefits they saw in cooperating with the collective effort.

The cooperative approach was dominant throughout the war years and is obvious in the construction of the great post-war multinational concerns, both public and private. In this perspective, it seems self-evident that the interests of each party must be considered by the whole in order to keep people wanting to be involved, not just forced to do so. In the lean field, cooperation for instance is very visible in the Training Within Industry wartime programs of job instructions, job methods and job relations. Supervisors were rapidly trained to run war industry workshop by teaching them how to better collaborate with workers in their charge.

Yet, in the 1960s, at a time of absolute world domination of US businesses, subordination came to the forefront. Peter Drucker was inspired by General Motor’s manage-by-the-numbers approach to formulate his management by objectives theory (still alive and well today in the form of Objectives and Key Results, etc.). Early Boston Consulting Group and Bain consultants would rationalize business lines to focus – scientifically – on the most profitable products exclusively.  Later, activist investors became obsessed with agency theory: how to make sure the CEO would work exclusively for shareholders and not for her own benefit, or that of other stakeholders. The answer to that problem was outsized bonuses for CEOs based on shareholder value.  Power loves subordination – it’s simple and reassuring. The downside is that it leads to poor outcomes overall, as we can see by the steady fall of company performance measured by Return on Assets:

 

READ more HERE

The power of suggestions

TPS is the most prominent and visible element of Toyota’s story, but it’s not the only one. There is a relatively hidden – if not invisible – part of the story that is often overlooked and yet contributed so much to the company’s success: harnessing the power of suggestions and taking on ideas from employees. Indeed, suggestion schemes and the work of the creative ideas office is the backbone of any Toyota operation from a team member engagement perspective.

The creative ideas office is constantly capturing ideas, identifying potential solutions to the many minor problems that team members experience every day at the workplace. These ideas and suggestions inform the use of the TPS tools and methods.

The activities of the suggestion system are seldom publicized or talked about as a process in the broader sense of the term. Usually, TPS tends to be the attention grabber. Yet, suggestions systems make up an essential element of team member and people engagement. They are a cultural enabler that takes team members’ direct input on what could be improved and how to make the work “a little bit easier”, as the mantra goes. They highlight improvement opportunities.

Such an approach to harvesting ideas and nurturing suggestions has been used and refined in Japanese plants since the early 1950s. However, it is not unique to Japan. To varying extents, it has also been rolled out at many of Toyota’s offshore sites. The deployment of suggestion schemes has been prevalent across the company since the late 1980s, when Toyota moved into the North American market and started to build a global manufacturing footprint.

Suggestions and creative ideas have contributed to a constant reduction in Toyota’s internal manufacturing costs in prior years. Tens of millions of suggestions and ideas have been captured and synthesized over the decades, ultimately impacting their bottom line. These well-entrenched method for collecting and assessing suggestions goes through a rigorous screening process: team members always present ideas to their managers to ensure they thoroughly understand them and can explain the benefit they would lead to.

Ultimately, the entire process is directly overseen and led by the most senior company officials. Why is that? You have to consider the scale and the scope to take the creative idea or suggestion and then have the authority, power, and oversight to imagine the benefit of implementing it everywhere. As a senior executive at Toyota leading this process, you can make these changes happen everywhere if you can prove they would result in a robust improvement with a multi-site impact. No matter how small the improvement, you can get considerable gains if you apply it across sites.

Toyota widely acknowledges that if you want to successfully run a business as CEO or President, you need to have led or overseen the suggestion/creative ideas office in Japan to qualify for a shot at the big chair. This means that such a process is seen as a solemn part of servant leadership development for corporate executives.

Has your business and lean approach got a grassroots suggestion scheme in operation that looks at creative ideas like Toyota does? How are you directly connecting with your employees to grasp concepts and nurture the generation of suggestions from within the operations? Are you using a process or system that is accessible and open to all employees? Are you continuously harnessing these ideas from all your employees in a forum where you can grasp powerful or great concepts?

Maybe it’s time to rethink your strategy and make a change, perhaps re-aligning and reigniting your business’ interest in tapping into this pool of potential wealth.

Embracing the kaizen spirit

When we emphasize systems and roles but fail to encourage and support kaizen, we cannot expect to tap into the full potential of Lean Thinking as a cognitive revolution.

A story of caring leadership and creativity

A leader’s creativity and care for her people can lead to extraordinary results even in the most challenging of environments. As the latest LGN book comes out, the author reflects on one of the most impressive lean transformations you will come across.

Pathways to reduce greenhouse emissions

FEATURE – Imagine targeting a quarter of the world’s greenhouse gas emissions by setting our lean minds to it? The authors discuss building better, circular supply chains and designing sustainable products.

Source – Planet lean

Having fun with lean

INTERVIEW – As the Lean Global Connection approaches, we learn more about one of the sessions attendees will be able to enjoy and how a game can make lean learning fun.

Is radical quality possible in the tech industry?

A couple of weeks ago, I was attending a Kaizen workshop that focused on reducing the lead-time for delivering a batch of software features to our customer.

At Sipios, we design and code websites serving organizations in the financial sector. For this specific customer, our team would deliver features to end-users on a weekly basis. The delivery process starts on Thursdays at 12PM, with an expected lead-time of 3 days. However, for the last few deliveries, it ended up taking around twice as long, causing major issues for both our customer and our teams:

  • skipped or delayed deliveries of critical features;
  • waste due to the quality department having to verify every single feature of the application several time at the final inspection stage;
  • frequent interruptions for software developers working on the next features.

The reason for this extended lead-time was quality defects, called bugs in our industry. Not only were there many of them, but I was also surprised to see that teams were not prioritizing fixing and learning from those defects and often preferred working on upcoming features.

That Kaizen session hit me hard, as it helped me realize that, as a CTO, I was not creating a culture of “Quality First” in the company.

Coincidentally, I had just heard about Sadao Nomura and his Dantotsu method, the radical approach to quality improvement described in his book The Toyota Way of Dantotsu Radical Quality Improvement. Dantotsu allowed Nomura-san to achieve exceptional results in all the Toyota Material Handling factories he supported.

For us in the digital industry, the Dantotsu approach can be compared to Extreme Programming, a set of techniques used to achieve low levels of defects when writing software. As I read Nomura’s book, I got increasingly enthusiastic at the prospect of trying this method at Sipios.

In this article, I’d like to share the main lessons I learned from reading the book and how, in my mind, these can apply to the tech industry.


THE 8-STEP PROCEDURE TO PREVENT DEFECTS RECURRENCE

Simply speaking, applying Nomura’s 8-step method means to take every quality defect occurring in manufacturing through a full PDCA cycle in just 24 hours. As Nomura-san says: “Speed is the key.” In practice, this means that to fix a problem, root-cause analysis has to be performed, the identified countermeasure deployed, and horizontal deployment initiated swiftly through collaboration with the Quality Assurance function.

This is very different to the typical approach that exists in the tech industry, in which:

  • only high-impact defects (those, for example, causing website outage or preventing the end user from performing basic tasks on the website) are given a thorough analysis, called a Post Mortem;
  • post mortems don’t include a root-cause analysis and never result in the identification of skill that is missing from the team and that caused the problem in the first place. The countermeasures will usually strengthen inspection by adding automated testing steps to avoid the bug from outflowing again to customers, but they will rarely trigger the creation of a standard or training for software engineers;
  • post mortems define long-term countermeasures that are typically executed in the coming days or weeks, but never on the same day.

BUILDING VISUAL MANAGEMENT FOR RADICAL QUALITY

To visualize defects, targets as well as defect-related problem solving exercises, Nomura-san puts a lot of emphasis on visual management. This is to be expected in a lean book, but two elements really struck me. First of all, the fact that the computers are not allowed and defects are always analyzed physically, notably on a Quality Management board. Secondly, the way defects are divided into two categories – those coming from manufacturing and those coming from the technical department.

Once again, the tech industry does this in a very different way:

  • bugs are usually tracked using software like as Jira or Trello – the same tools tech teams use to manage feature development tasks;
  • There is no clear separation between engineering and production, even though there are great benefits to be reaped from distinguishing between coding mistakes and software design mistakes (like wrong specifications, defective architecture or choices in technologies).

PREVENTING DEFECTS FOR NEW GENERATIONS OF PRODUCTS

A challenge Nomura-san faced was defect prevention at a time when production of a new forklift model began. At this point in the book, one would assume that quality is always the priority, regardless of deadlines. Instead, Nomura explains how launching mass production of a new model should take 24 months and that the deadline cannot be missed.

The described strategy to achieve this focuses on prevention, to avoid as much as possible detecting defects during mass production or, worse, when the vehicle reaches the market and is in the hands of the end-user.

Nomura introduced Simultaneous Engineering Manuals (SE Manuals) for incorporating learnings from previously introduced models (VA/VE), including manufacturing constraints. This allowed the teams he supported to catch more and more defects at the design stage of the new model.

In the tech industry, too, many defects are only found once a new website is released. They are usually the same type of defect for each new website launch: servers not properly configured, missing edge cases due to rushing the work to meet a deadline, or failing to handle a high-than-expected number of end users visiting the website.

The application of SE Manual is not easy to translate into measures we can adopt in the tech industry, but if we look at VA/VE we can say we should focus on:

  • identifying the sections of the code where bugs are prevalent. This likely means that the features behind it are complex and should be either automated or avoided in future generations of products;
  • taking into account features that are already built in other websites, ideally reusing code whose quality is already “tested and certified”;
  • creating more standards, especially relating to the release of a new website.

In conclusion, I consider Nomura’s method a game changer. It teaches us that there is no shortcut to reach high levels of quality. As a CTO, this makes me want to raise the quality bar in the whole tech industry, where bugs are viewed as unavoidable time wasters. “Zero bugs” is the true way to go!

My team and I have already started to build visual management to try out Dantotsu at Sipios. I am hoping to be able to write a follow-up article soon to share with you the results we are trying to achieve.