6

Lean methods and tools (part III)

SECTION 1: IDEA MANAGEMENT SYSTEM (IMS)

Introduction

Many organisations find that one of the principal challenges during their Lean transformation is engaging employees in the daily routine of continuous improvement. Respect and humility are good starting points. Management must recognise that their frontline employees see problems and opportunities every day in their immediate work areas that they do not.

Long-established methods of attempting to capture ideas, such as suggestion boxes, do not work. There is a story about a suggestion found in the suggestion box: ‘Can you remove the suggestion box? Nobody ever uses it!’ Suggestion systems get stuck in their own red tape. There are long implementation times, low participation rates (typically < 5% of workforce), and high rejection rates, partly because some are duplicate suggestions which have already been considered. Most traditional suggestion systems fall victim to ideas for other people to do something about, rather than the originator of the idea. If all you have to do is suggest an idea for someone else to implement you can state whatever you like. Often the suggestion box thus simply becomes a grievance box.

In contrast to traditional suggestion systems that are typically hierarchical in control and approval, the idea management system (IMS) gives authority to people on the frontlines. The area supervisor acts as the catalyst and coach for ideas and manages the infrastructure for implementation. The focus is on the many, small, daily annoyances and minor problems that associates can resolve themselves that will lead to a smoother workplace. A hidden benefit of the implementation of many small ideas over time is that competitors cannot copy these compounded small improvements. The intention is that problems are nipped in the bud prior to escalating into bigger issues.

Emphasis on employee involvement over cost savings explains most of the difference between the two systems. Despite not focusing on cost savings, typically financial returns are about ten times greater than the traditional systems such as the suggestion box.¹

The three primary aims of the IMS are as follows:

1. Employee inclusion in local decision making – the intention is to increase engagement and the sense of belonging in the organisation, leading to increased intrinsic motivation and active involvement.
2. Training and skills development – the IMS improves problem solving, kaizen proficiency and speeds up on-the-job training. Move away from the concept of simply harvesting ideas from employees to promoting the IMS as a mechanism to improve and develop people. Focus on the people and the results will follow.
3. Positive effect – improved efficiency of operations, and reduced cost of poor quality along with intangibles such as improved safety, morale, and the creation of an environment of increased trust and teamwork are aimed for.

Employees should be coached to put forward ideas that make their work easier, can be implemented quickly, eliminate the cause of problems, save money, and do not cost too much to implement. The implementation rate for improvements proposed by those closest to the problem is very high. Your people at this level know the intricateness of their processes and have a stake in seeing their ideas successfully utilised. I have spoken to Toyota veterans and they say that there is a greater than 95% implementation rate for ideas as many of them are not implemented in their original form, but are enriched in collaboration with employees. People enjoy carrying out their own ideas (we support what we create) and are committed to seeing them work. It gives them a feeling of having a direct impact on the running of the workplace and a sense of accomplishment. Hence getting the person who raises the idea to implement it or to participate in implementation is crucial to the success of the system . This concept is formally known as kaizen teian. Self-implementation is the cornerstone of successful idea systems and the big differentiator between these and standard suggestion systems.

This level of empowerment will not happen overnight and at the outset people may need support in implementing their ideas, but this investment will develop more capable employees over time. This leads to a virtuous cycle where employees become more and more capable in problem solving and idea implementation. In the early stages management can seek ideas that are very basic. This stage is to get employees involved, thinking about and questioning their work. It also allows ideas put forward to be implemented (as they are basic) and this builds momentum. In the intermediate stage, management places emphasis on up-skilling, so that employees can provide better ideas. In order for the workers to provide better ideas, they should be trained in problem solving and in the use of basic creativity tools. This requires education. The hidden benefit is that the work becomes much more engaging as people use their thinking skills on a daily basis. Ultimately, in the advanced stage, after the workers have become more educated, involved, and hence engaged, management then starts to be concerned with the financial return on ideas.

Documenting ideas is crucial

You may find that one of the hardest things to instil during implementation of the IMS is to ensure that all ideas are written down. We commonly hear: ‘That’s already happening here, we just don’t write the ideas down.’ However, is there anything else that is important, for example, your recruitment policy, that you do not have a process for? Ideas are too important to be left to chance and in the absence of a defined process they will be pushed to the back burner due to urgent day-to-day pressures.

It is vital that the reasons for having to write down all ideas are communicated to employees:

• When ideas are written down you can see what has changed and where, and who is involved in stimulating this type of improvement. The objective is that ideas will be shared and spread across different areas of the organisation.
• The process gives employees personal pride about being allowed to fully participate in the improvement process.
• You write things down to sustain the activity. It is the constant doing and sharing that motivates others to get involved.
• Ideas are forgotten and lost trying to keep up with the pace and fervour of the daily work demands, so need to be noted down ‘on the job’.
• Sharing ideas often leads to another cycle of ideas by triggering other ideas and cross pollinating additional uses for the idea.
• By sharing ideas the originator has self-expressed accountability to their peers to implement the change.
• By sharing ideas, people naturally recognise that everybody has opportunities to improve.

The intention is that the idea is written down, concisely detailing the before and after situation, along with the effect, on an idea card (see Figure 6.1). The idea originator fills in their name and classifies the impact such as ‘better process’, along with a quick educated guess of cost savings from predefined guidelines. It is also good practice to include pictures or simple sketches of the before and after condition to enhance clarity. Finally the card is posted on an idea bo ard for sharing (see Figure 6.2).

Figure 6.1 Idea card format

Idea metrics

In sport, if we are not keeping the score we are just practising. So it is in business and a small number of metrics are needed to monitor and improve the IMS. Some popular metrics include:

• Participation: the number of people who have submitted an idea over a certain time period. A person is only counted once, regardless of the number of ideas submitted. Best-in-class organisations achieve greater than 80% participation.

Figure 6.2 Visual idea board format

• Ideas/employee: total number of ideas implemented for the time period divided by the total number of employees at the end of that time period. Best-in-class organisations realise over 24 implemented ideas per employee per year. To put that in perspective this equates to one small implemented idea per employee every two weeks. Do you think that this is a realistic target for your organisation to release the vast untapped ideas residing within your employees?
• Savings/employee : total savings for the time period divided by the total number of employees at the end of that time period. Savings normally should be net, that is gross savings minus recognition and administration costs. Best-in-class organisations save over £2000 per employee per year. If an organisation of 500 people was trading on a 5% profit margin this would be the equivalent contribution to the business of winning a contract worth £2 million in revenue per year. However, as stated previously, the radically greater concealed benefits are the substantial increases in employee engagement and skill levels and the subsequent increases in discretionary efforts of employees.
• Average turn-around time: the total time of processing the idea from being put forward to implementation. Best-in-class organisations have a turn-around time of less than seven working days.

Reward and recognition

When organisations pay monetary rewards for ideas there are winners and losers. To overcome this you should make ideas and creativity an expected facet of everyone’s job. Coming up with an idea is often the easiest part. There are many stages to be fulfilled and people involved to bring an idea into realisation. Hence paying the originator for proposing the idea often results in stifled teamwork and usually bottlenecks in the process. Rewards substantially increase the cost, time and effort needed to evaluate and implement ideas. The best systems rely on recognition and non-monetary items (Chapter 10 discusses a unique form of recognition under the Cathedral model that is highly applicable to idea systems).

Intrinsic motivation is the natural desire that people have to do a good job, better themselves and make a positive difference. It is the wholesome and fulfilling feeling a person gets from making improvements to their work. Intrinsic motivation is the difference between saying ‘You couldn’t pay me enough to do that’, and ‘I can’t believe I’m getting paid to do this!’ According to Alfie Kohn² only intrinsic rewards motivate over the medium and long term. Nurturing intrinsic motivation is crucial to the success of the IMS.

Extrinsic motivation is work done in expectation of a monetary reward. Paying for ideas can be extremely harmful to the IMS. Extrinsic rewards fade fast, become an entitlement, and may often lead to destructive behaviour. The process to implement the idea can be driven entirely by the anticipation of the reward and hence is open to dysfunctional behaviours such as cheating, withholding information and discouraging teamwork. It is important to communicate the reasons why monetary rewards are not employed to avoid the impression that the organisation is merely being tight-fisted.

Research studies have concluded that non-cash recognition is more effective than direct cash awards. A survey of 1600 companies by The American Compensation Association on productivity concluded that:

• Non-cash awards offered a 3:1 return on investment in comparison with cash awards.
• Successful non-cash initiatives cost 3–5% of an employee’s annual salary while successful cash programmes must equal 5–15% to be successful.

The recognition has to be something that the employees want – which is different in various cultures.

This following popular parable demonstrates the perils of paying out rewards.

Rewarding employees for ideas is dependent on each organisation but some typical recognition examples include:

• a newsletter announcement for all winners
• monthly raffles for idea participants
• attendance at conference and training courses
• polo shirts for prolific idea participants
• praise – a personal ‘thank you’ means a lot
• cinema tickets – this promotes family involvement
• gift vouchers or ‘Idea £s’– employees can pick from a catalogue the items that have a special meaning to them.

Recognition takes little or no money; the most important component is that it must be genuine. We are all motivated by different things so the best policy is for supervisors and team leaders to discover what motivates each individual on their team, then use a variety of recognition methods tailored to enhance each individual’s motivation to participate. As long as the intended recognition has meaning to people it can cause them to do extraordinary things. Often the greatest recognition for employees is seeing their ideas have been listened to and used. Think what people will go through to win coveted sporting medals (that cost a few pounds each!). How can you create that coveted value for your organisation’s recognition symbols?

Idea process flow

This has the following steps:

1. Challenge all employees to come up with two improvement ideas per month to make their work easier or more interesting, reduce costs, improve quality, improve throughput, improve safety, improve customer service, etc.
2. Encourage employees to write down ideas on an idea card every time they find a problem, make a slip-up or see an opportunity for improvement, and post them on the ‘Proposal’ area of the visual idea board. Whenever possible take photos or draw pictures of the before and after situations. Viewing a picture is easier than words and establishes clarity. A picture quickly explains the improvement idea and stimulates other people to do the same thing. We want people to copy each other to accelerate the continuous improvement engine and get everyone involved. Copying stimulates even more and greater ideas.
3. The idea generator evaluates and filters their idea via their peers to ensure it is suitable. (This saves supervisor evaluation time and improves the quality of ideas.) The supervisor then responds to the originator within 24 hours of the idea being forwarded. The supervisor should mentor and teach people who submit weak ideas so that they are able to submit better ones next time. Weak ideas are valuable as they unearth existing training gaps. Always remember that if you reject the idea with no reason the person feels rejected and worse still they may never bring forward ideas again! Strive to enrich the ideas with the originator and if this is not possible be tactful and explain the reasons why it is not feasible at this time. Also be welcoming of issues and problems that are brought forward, even if they are not accompanied by a solution yet, as these are also great potential opportunities. Remember the underlying goal of Lean is to ensure that all problems are surfaced on a continuous basis. Consider also the ripple effect (spread or yokoten – see the Glossary) for all ideas and the leverage impact that these may have across the entire organisation.
4. The person who comes up with the original idea should implement the idea themselves or with their work team. If additional help is needed from maintenance, technology, etc. the idea originator should coordinate the completion of this work.
5. Record implemented ideas in an idea log and/or electronically into an idea tracking software package. The electronic version is useful as the system grows and can be used as a knowledge database for intra- and cross-site spread. Software can also be utilised for automatic metric report generation. Data mining also becomes important once you get to several hundred ideas, to establish trends, etc.
6. Develop monthly metrics to ensure that the goal of two ideas per month is reached and display the results visually at the gemba. It is preferable if the local frontline Idea Champion maintains these to build buy-in and area ownership.

If this six-step cycle flows smoothly the improvement activity will also flow slickly, one idea will lead to another and continuous daily improvement will translate into improved performance and higher employee engagement. The intention is that this cycle will be used countless times daily and simplicity is all! In summary the essential elements of high-performing idea systems are:

• It is easy to put forward ideas.
• The evaluation/enrichment process is swift.
• The idea originator coordinates the implementation of their idea.

Idea management system review

To exploit the vast latent potential of employee ideas, roles and responsibilities for the idea system must be outlined at all levels. Ideas should be visually displayed on boards, implemented fast and recognised. Fresh skills are learned by employees through interacting with support functions when implementing their ideas. People are coached to recognise ‘hidden’ waste, and the idea system is integrated into everyday problem solving. Idea activity should also be measured. The employee’s direct manager should mentor and support the idea originator during implementation. Small ideas do not take vast time and resources to put into practice and are not a drain on management: the opposite in actual fact.

Employees hate to see money wasted and the IMS gives them the motivation and authority to stamp out waste. Even occasional ‘bad ideas’ should be viewed as training opportunities; the intent behind the idea should be teased out with the employee or team (yes, team ideas are welcome too!) and put forward again. Peer accountability is expressed through employees posting their ideas in the local work area. In advanced systems, ideas are often tested and implemented prior to being put forward into the idea system.

SECTION 2: KAIZEN EVENTS

Introduction

The Japanese word kaizen translates as change for the better. Kaizen events or rapid improvement workshops are improvement blitzes with specific stretch targets that last typically between three to five days. These are sometimes referred to as kaikaku (large-scale change events) or jishuken (management-based events) or accelerated improvement workshops (common in healthcare where engineering language can be bewildering).

Kaizen events should be deployed strategically to improve a specified value stream. The future state value stream map, as discussed in Chapter 3, will highlight systemic problem areas in the value stream and significant improvement projects to close these gaps are often tackled using a kaizen event workshop. Additionally, organisations often choose to run an event as a proof point to demonstrate the potential of Lean.

The most successful Lean companies in my view use kaizen events (for both management and frontline staff) as the primary mechanism for learning about Lean. Lean is not learned in the classroom (although you can introduce the concepts here), it is learned deeply by physical practice just as an athlete cannot be taught how to perform their sport from the dressing room, instead they have to practise daily. Kaizen pulls in all the Lean tools over a period of extended practice and really flicks on the light bulbs as to the potential for improvement for both management and team members. Kaizen events are classified as either maintenance kaizen (to resolve issues such as downtime, etc.) or improvement kaizen (to raise the level of performance closer to the fourth True North Lean principle of perfection). Kaizen has the potential to give an organisation an excessive competitive advantage and really compresses traditional project lead times.

Figure 6.3 The kaizen flag

The kaizen flag concept³ (Figure 6.3) is a good barometer for where focus should be at the various levels in your organisation. At the senior leadership level approximately one-third of time and energy should be spent on strategic activity designing waste out of future processes and developing innovation opportunities for the organisation. Another one-third of the time should be spent directly participating in flow kaizen events that improve the overall system-wide value stream velocity of current operations. The remaining third is spent on day-to-day operations, people management and facilitating the improvement of standardisation through gemba walks, etc. At the middle management level approximately one-third of time is spent coaching and developing people in improvement work, problem solving and point kaizen (local changes such as through the idea management system). The remaining two-thirds of the time is spent running the day-to-day operations, auditing standard work and on personnel activities. The frontline is where money is made and services are delivered, hence the greatest proportion of time here is spent delivering value to customers. However, crucially the Lean paradigm calls for the dual focus of doing work and spending time every day on improvement work and point kaizen to incrementally raise the bar.

These workshops are team-based process improvement bursts that are highly action oriented. In general, more than 50% of the identified improvements during the workshop are implemented within the week and the vast majority within 30 days of the workshop’s end. This represents a new departure of getting things done fast versus the conventional project mindset that can span months. Significant improvements in the range of 50% or more on the baseline metrics are realised over a period of one week or less.

The events are powerful engines for change as cross-functional teams of people with deep and distinct process knowledge are brought together for a highly focused period to analyse their processes and realise improvements. For example, in an event with a team of 12 people with an average of 15 years’ experience each this would bring 180 years of accumulated knowledge, experience and wisdom to the table for an entire week. Kaizen events are also often used as an action oriented method to systematically deploy the hoshin strategy.

Common results that can be achieved include:

• throughput time reduction of 50–90%
• productivity improvements of 15–25%
• work-in-progress reductions of 20–85%
• set-up time reduction of 30–85%
• defect reduction of 50–100%
• material/supplies/people travel distance reductions of 50–85%.

Kaizen event stages

Do not underestimate the time needed for preparatory activities to ensure that you run a successful event. As a rule of thumb, 40% of the time should be spent on preparing for the event, 20% of the time on the actual event week itself, and the remaining 40% on close-out and follow-up activity.

Pre-event preparation

The cycle time for a kaizen event is typically seven weeks and then two further monthly checkpoints are carried out after 60 and 90 days from the event week to lock in the gains. Preparation for the 3–5 day workshop normally starts three weeks before the event (see Figure 6.4). When the area for improvement is identified the management and Lean facilitator (externally appointed or internal expert) normally walk through the process and construct a high-level process map. The following tasks need to be considered by the event leader and Lean facilitator in preparation for the week-long event.

Three weeks before

• Schedule the week event.
• Select the event sponsor (authority to remove potential roadblocks).

Figure 6.4 Kaizen event outline

• Draft the kaizen charter. This document sets objectives for the event, targets for improvement (for example, productivity, quality, cost, lead time, set-up time), scope of the event, process start and end points, constraints (financial, etc.), event leader, core and extended on-call team members. The charter is personally signed by the area management team as a sign of commitment to the process and to give the team authority to make changes.
• The composition of the team’s stakeholders is a critical ingredient for success: the majority should be from the area under improvement, they should have particular knowledge of the area operations, be respected and viewed as leaders in the area. Often sceptics can be transformed during the event, a pair of fresh eyes on the team can bring new perspectives and unions should be represented on the extended team at least.
• Typically the optimum size of the kaizen team is between eight and twelve core team members (a full-time presence on the week event) but this can vary widely depending on the scope of the undertaking.
• Gain alignment and discuss expectations with area management.
• Perform a Lean assessment of the area (see the Appendix).
• Develop a data collection plan to be completed before the workshop such as process attributes like takt time, cycle times, staff numbers, overtime, process flows, layout, changeover time, shift patterns, demand data, inventory information, current standard work documentation (if it exists) etc.
• Book a conference room or equivalent for the week and schedule the event week in people’s diaries (including the presence of management for event report outs).
• Draft the communication plan to be deployed before, during and after the event. (Note: this is one of the most commonly omitted tasks and is of extreme importance.)
• Meet with the kaizen team to present the kaizen process and to discuss the event objective. Also involve downstream and upstream internal customers and external customer representation if appropriate.
• Walk through the process with the core event team and record observations as required.
• Implement week three communication plan.

Event workshop

Bruce Tuckman proposed the popular model of team development in 1965 based on forming, storming, norming and performing. In 1977 he and Mary Ann Jensen added ‘adjourning’ to the model. This model is very appropriate to describe the development of the event team over the course of the week together.

The attitude and culture required for success are encapsulated in the 12 golden rules below. These are conveyed to the team throughout the week with the expectation that they are adhered to. Team members are also strongly encouraged to use the ‘challenge anyone concept’ when adherence to any of the rules is violated.

Confirmation phase

The confirmation phase ensures that improvements made in the event week are sustained and yet further cycles of improvement are progressing. There is a detailed follow-up meeting each week for one month after the event where the primary focus is on closing out the actions at the 30–day checkpoint. Standard work and training constitute a lot of the heavy lifting in this phase. Two further checkpoints are organised for 60 and 90 days after the event to cement in the improvements.

Kaizen review

Key success factors for a successful event include:

• through preparation, post-event follow-up and support
• a dedicated, internal, Lean facilitator for the workshop
• an external Lean coach for early events
• cross-functional team selection representing all stakeholders from the affected value stream
• management kick-off and active involvement throughout the entire kaizen cycle
• finance department verification that the claimed ‘hard’ cost savings are real and that there is a plan in place to exploit the savings (for example, released capacity to do more should be translated into increased demand)
• just as important as the actual physical results from the event is the way people have developed and grown as leaders as a result of their participation.

There should be acute recognition that kaizen events alone will not be sufficient to transform your organisation. For example, if you run 50 kaizen events per year in your company that may have hundreds of processes then you will only get to revisit a process every second year or so and entropy will have pulled its performance back down. For Lean to be fully effective it must be deployed as a system; the mindset and methods applied together are greater than any single method. Kaizen events are certainly powerful for step change improvements but the real gains emerge when everyday incremental improvements are implemented by those working the processes (see section 1 of this chapter and Chapter 11’s Lean daily management system). Everyday improvement is possibly the most powerful tactic to ensure that Lean gains are indeed sustained.