Chapter 3

Lean in the Organization: Principles, Behaviors, and Change

In This Chapter

Probing the cultural climate

Aligning behaviors to Lean principles

Understanding the phases of organizational change

You are part of one or more organizations. An organization is a group of people arranged and structured for a purpose. It could be for a business purpose (such as, to develop or provide goods and services to customers for a profit). It could be another purpose (such as education, government, or nonprofit contributions to humanity). A family is a type of organization.

An organization’s culture and the principles that drive people’s behaviors ultimately determine the degrees of an organization’s performance, quality, and success. Think about famous organizational cultures — such as Facebook, Nordstrom, P&G, Nike, Toyota, or Goldman Sachs — and how they’ve performed. In each of these cases — as in the case of every organization — people’s behaviors have both steered and been steered directly by the principles and belief systems fostered from within and spread across the organizational landscape . . . for better or for worse.

Organizational cultures are deeply ingrained. The principles guiding the behaviors of the people within an organization are purposefully long-lived and slow to change. Organizational culture has mass: The larger it is and the faster it’s going, the more momentum it builds. This trait is a good thing when that momentum is carrying you in the right direction, but not so good when you wander off course or if circumstances dictate change.

Few organizations are born and raised as Lean organizations, so if you’re now embarking upon a Lean journey, you’re likely in the process of changing course. This means that in addition to applying the methods and techniques described in the rest of this book, you will also be changing the organizational culture by changing principles, leadership styles and individual behaviors. As you begin this journey, you’ll need to understand how your organization’s current principles and behaviors align with Lean principles and behaviors. The extent of the gap between the two will help you understand what changes are required and how to make them. As with any change, it’s in how you change, how often you change course and how you communicate these changes that you will influence the organization’s response.

In this chapter, we tell you all about the organizational principles and behaviors that reflect a Lean organization. We show you how to assess an organization’s true principles and behaviors versus its stated principles. You will understand how to compare your current organization’s principles to Lean principles, and get a feel for a basic organizational change model. Finally, you will see how to move the organization beyond roadblocks. You can combine this chapter with Chapters 4 and 5 for a complete understanding of implementing Lean with your people and in your organizational culture.

Many analysts and pundits use the term values in defining and describing organizational culture and principles. In the Lean world, the term value is more directly associated with the concept of what the customer values and adding value within a process or work activity. To avoid confusion in this chapter, when we want to refer to organizational culture and principles, we use the word principles.

Assessing Organizational Culture

Before you can change your organizational culture, you have to understand the culture in reality. In this section, we tell you how to assess the current organizational climate, compare it to Lean principles, and identify the gap that exists between the two.

Will the real principles please stand up?

Most organizations have both a formal set of principles and an informal set of principles. Collectively, these form the foundation of virtues and beliefs that reinforce the integrity and character upon which everyone — including employees, customers, suppliers, shareholders, analysts, and consumers — depends.

The formal principles are often a flowery list of words, hung on a wall or occupying a page on the employee web site. Most organizations address such hallmarks as customer service, trust, teamwork, diversity, honesty, and respect for people in their cadre of principles. No doubt an expensive team of high-level people spent the better part of a retreat session precisely chiseling those idealistic words into a lofty statement of principles — only to find that, in reality, they’re mostly unknown or ignored within the organization.

The informal principles are often not stated, but people reflect them through their daily interactions. Be careful, because these attitudes, words and actions will influence new hires before they even finish the orientation class! The informal principles are the basis of what really happens in an organization — when management isn’t looking. Your goal is to have alignment between the formal and informal, so no matter who is watching, the people drive the culture in the direction you want it to go.

The informal principles may be at odds with the formal ones. This discrepancy causes tension and conflict across the organization. If “Respect for People” is a formal principle, but people are poorly treated or fired indiscriminately, your principles are at odds. If “Trust” is a formal principle, but people are constantly second-guessed and overruled, you have trouble. “Integrity” was one of Goldman Sach’s stated principles, but it’s pretty obvious that the real set of principles resulted in behavior of a different sort.

Instead of a declaration of lofty principles that largely go ignored, Google, for example, has a set of ten principles that are actionable and consistent, including “Great just isn’t good enough.” Another one of those principles is “You can make money without doing evil.” Now, that’s a principle that can really guide behavior!

In an ideal Lean organization, you live and breathe a specific set of principles. They’re consistent and powerful, and they have life both formally and informally. Everyone in the organization is in tune. In reality, you may not be able to live up to every one of those principles 100 percent of the time, but you strive for perfection — every minute of every day with each member of the organization. As a Lean organization, you will strive to eliminate barriers that prevent you from living according to your principles.

Getting the culture to the starting line

If you’re beginning the Lean journey, you have to know where your organization stands as the journey begins. Identify the current principles and beliefs, and assess what needs to change before you embark. You have organizational baggage accompanying you on your journey. The culture fairy is not going to wave a magic wand and instantly change the entire climate and culture of the organization — you’ll have to work at it with every interaction every day.

If you’re like most organizations you have undertaken many initiatives before trying Lean. An organization’s normal reaction is to resist change, hoping that “this too shall pass.” You’ll hear people grouse about needing to do their “real job.” Keep in mind that these attitudes are part of your current state. Your past track record will influence your organization’s acceptance of another new initiative. Begin by assessing the current state of the organization. Then you can identify the gaps that could thwart your Lean efforts.

Identifying the current state of the organization

Taking stock of organizational culture is a squishy task: By its very nature, it’s imprecise. Author and poet Hans Magnus Enzensberger once said “Culture is a little like dropping an Alka-Seltzer into a glass — you don’t see it, but somehow it does something.”

Begin your assessment of the current situation by asking questions. You can use several mechanisms to gather data: employee engagement surveys, observation studies, electronic surveys, organizational network analysis and employing outside observers or interviewers — these are all options to gather information on the current organizational climate.

Here are some questions to start your assessment:

What are the officially stated principles and beliefs of the organization?

What organizational behaviors support those stated principles?

What behaviors suggest a different set of beliefs?

Where are the stated and implied principles at odds? Where are they consistent?

Describe the relationship between management and non-management employees. Identify behaviors that typify the management/non- management relationship.

Has the organization undergone mergers and acquisitions? If so, how many cultures coexist in the current organization?

How has the organization handled change initiatives in the past?

When is the last time the organization had a significant improvement effort? How long did it last?

Are any formal change initiatives currently active?

How effective have these change initiatives been?

How many members of the current organization have been involved in the change effort?

What behaviors support a Lean organization and should continue?

You can’t observe and measure any of this from your office. You must go to “where the action” is to see the true picture (see Chapter 13 on 3Gen). You’re trying to identify behaviors to leverage, as well as misalignments and incongruities, before you formally introduce a set of Lean principles. For example, if one of your stated values is “quality first,” but you observe defective product being shipped to meet a delivery deadline, this is incongruent. If a value is “the customer is king,” yet you notice your employees ignoring or being rude to your customers, you have a gap to close. If “continuous improvement” is another stated value, but every year the organization fights the exact same fires, what does this tell you?

The organization’s formal principles may be close to Lean, yet the informal principles may be across a chasm as wide as the Grand Canyon. Knowing your gaps in your credibility will help you formulate a change strategy to support the shift from traditional operations to Lean.

Defining Lean principles in an organization

Remember, the overarching Lean principle is continuous incremental change. Foundational to this are two additional categories:

Customer satisfaction

Respect for people

Many Lean programs and practitioners focus on “customer satisfaction” and forget “respect for people.” You must have “respect for people” to be successful; it is as fundamental to the Lean enterprise as customer satisfaction for your efforts to be sustaining and your success to continue. Each area contains subordinate principles, as shown in Table 3-1.

Table 3-1 A Summary of Lean Principles

Continuous Incremental Change
Customer Satisfaction	Respect for People
Perform value-added activities	Ensure personal safety
Operate just-in-time	Foster employee security
Eliminate waste	Challenge and engage everyone
Flow and pull continuously	Celebrate wins
Create quality at the source	Grow and learn continuously
Live standardized work	Communicate effectively

Measuring the gap

To understand your organization’s current culture and define what Lean principles mean to you, go observe what is really happening, and make a formal assessment. In addition to the questions found in the section “Identifying the current state of the organization,” this assessment should include:

What are the current principles?

Is each a formal or informal principle?

What behaviors reflect or demonstrate each principle?

Is this principle, and the way it is expressed, aligned with Lean?

How specifically does each principle align with Lean?

What supportive actions should stay in the organization?

What new actions and habits must you develop to strengthen each principle?

What mechanisms in your current “people development process” can you use or create to promote the growth of these habits and actions?

How can you measure these cultural elements and actions?

A commonly used graphical tool in Lean for showing progress in several areas to a defined goal is the spider chart. In a spider chart, the outside circle represents full compliance or 100 percent attainment, while the center of the circle represents no compliance or 0 percent attainment. The objective is to fill in the circle as performance increases. The spider chart in Figure 3-1 shows progress for cultural transformation. In this example, the organization has rated personal safety at 90 percent and value-added at 20 percent. (See Chapter 13 for more information about spider charts.)

As the organization matures, your definition for each element will change because you and your organization will continually evolve. Your initial scores may decrease as you continue to learn and scrutinize your performance. You also may realize that your initial evaluation was too high or you need to set a more rigorous goal for the organization. The constant quest for improvement in all aspects is more important than the number.

After you’ve assessed the organization’s culture, you’ll know where you’re strong and where your challenges lie. The nature of the organizational strengths and weaknesses will determine your change initiative. Leverage your strengths and close your gaps. Going forward, periodically assess your culture, just as you would quality, delivery, cost or customer satisfaction.

Changing the Organization

Rarely are organizations naturally prepared to begin a Lean journey. Most often, organizational cultures twist, contort, and usually writhe in outright pain as they grow and mature into a Lean organization. These contortions are recognizable and typically occur in five discrete phases with each turn through the cycle of improvement. As the Lean journey progresses, the organization generally moves through these phases more quickly. Note that everyone in the organization will change how they do their daily activities in attitudes, actions and approaches; more on this in Chapters 4 and 5.

Everyone in the organization progresses at his own pace. Some people are “change embracers,” some are “data driven,” some are “wait and seers,” and some are “resisters to the end.” In the process of change, you must treat each of these factions accordingly.

Pay attention to the “respect for people” aspects of change. It may seem too murky, political and time consuming. But if you don’t pay attention to it, your Lean efforts will not be successful in the long term.

Going through the five phases of change

Independent of the nature of the change, an organization that’s undergoing a transformation will move through five phases — most likely not in strict serial order. Because an organization is a collection of individuals, each of whom accepts change in his own time, the organization may sometimes have to go backward to go forward. As you take your next steps in your Lean journey, you’ll go back through these phases. The trick for management is to monitor the pulse of the organization to know in what direction it’s morphing and evolving. When backsliding occurs, management needs to correct the course.

Phase 1: Recognition and acceptance

Recognition is the beginning of any change, and acceptance completes this first phase. Just like in your own life, an organization must recognize and accept that today’s conditions are no longer viable.

Not until the pain of the present is greater than the pain of the uncertain future will an individual or organization embark upon a change of any type. Opportunity alone will motivate only 5 percent of the population. A fear of loss or some other significant emotional connection motivates the other 95 percent. The critical first step in the process is to clearly identify and communicate the need for change until the organization recognizes and accepts the reason.

Recognition usually requires letting go — letting go of a stale dream, an obsolete vision, current work practices, or nostalgia for the past. People are reluctant to let go — many people cling to memories and work practices of the good old days long after they’re gone and irrelevant. And the bigger and more established the organization, the more difficult letting go is.

When embarking upon a Lean journey, the organization has to change — continuously. It can’t expect to harbor its old ways and at the same time truly implement Lean. How quickly and how readily the organization adapts to Lean depends upon the past, the present, and how far away the organization is from its desired future.

Think about a family that has outgrown its current home. The lone bathroom is overcrowded in the morning, the kids are tripping over one another in the bedrooms, and there’s no place to relax or do homework. But the mortgage is affordable, the neighborhood is comfortable, and the memories are many. At what point does the family recognize and accept the need to make a change?

Phase 2: Direction and planning

After a critical mass of the organization recognizes and accepts the need for change, the next step is to determine the new vision and set the direction for the future. Only then can you define the action plan to move the organization into that future.

Sometimes, the very act of painting the future vision helps cement the acceptance for change. When that vision relieves enough current pain and suffering, organizational buy-in improves. Forward momentum begins to build, which attracts support and ideas for the action plan.

Consider the family from the preceding section in that cramped house. After they accept the idea of change, the next step is to paint the vision of their future — a vision where they have enough space and sufficient facilities to meet their needs and better enjoy their lives together. The parents decide that the time has come for radical change — a move to a new house. As they discuss the move within the family, they receive input and considerations from all family members. They create a vision of their new home and set the direction — a target for what and where to buy. After the direction has been set, the detailed planning phase starts. The plans include the full range of activities required when you move into the new residence — from packing and changing schools to utility transfers and meeting new neighbors.

Overall, the family recognizes and accepts the idea of change, and they define the vision and the plan. Yet each member of the family will deal with the reality of the changes in his own way. If Trevor has to leave his baseball team in the middle of the season, or Sara worries she’ll have trouble making new friends at a new school, they may quietly hope that it won’t happen. Even if the planning accounts for it, in reality, each family member will adapt in his own time.

Organizational acceptance of change is very similar to what the family experiences. The direction comes from the top, but those in lower positions may feel like change is being forced upon them. They may see the potential for long-term benefits, but in the short term, they’ll be uncomfortable — if not downright unhappy and skeptical. When you’re able to involve people’s ideas about how to achieve your vision, you decrease this resistance.

Include the people in your organization who are key influencers — both the supporters and the potential resisters — in the planning process. As they become champions of change, they will positively influence the whole organization.

To facilitate acceptance within the organization, consider three keys when communicating your change in direction. Paint a picture of your long-term vision for how you see the organization interacting and behaving on a daily basis. Show the reasons for changing with a message that engages your audience at an emotional level. Back up these emotional ideas with data, to appeal to smaller data-driven faction of your audience. After you’ve painted the big picture, communicate the specific next step you want to develop in the organization. For example, if improved root-cause problem solving is what you want, the behaviors you may want to develop for managers are go and see the conditions rather than lead from their office or a conference room and ask probing, open-ended questions.

Phase 3: Charging forward

After organizational leaders set the direction, make the plans and enroll the influencers, it’s time to charge forward and begin to execute. If you’re helping to lead the change, you’ll look over your shoulder to see if anyone is following you. Some will be, but others will be staying put, waiting to see what happens.

When you start to implement Lean, a range of personalities will be present — hiders, naysayers, adapters, wait-and-seers, opportunists, and a host of other characters. They may cause you to retool your best-laid plans. Facilitating organizational change requires

Clear expectations: The clearer you can create your long-term vision — what will it sounds like, look like, behave like, and so on — the easier it will be to bring people with you. When you have the big picture, clearly identify the next step you want the organization to reach and incorporate into daily life. This will make the long-term vision feel more obtainable.

Proper communications: The best way through the change is two-way communication — not only listening but being heard. (See Chapter 4 for more about communication.)

Proper behavior: Actions must match the new direction — this is vitally important. Actions must support the vision, adhere to the principles, and reinforce the plan. Just like in the family in the too-small house (see “Phase 1: Recognition and acceptance,” earlier in this chapter), each member may need something different to adapt to the new situation. But by virtue of the move, the parents have said, “There is no going back.”

Think about the family on moving day. There are boxes everywhere. The moving van is loaded up. Matt and Michele are hiding in hopes that mom and dad won’t notice. Trevor is convinced that there won’t be a good baseball team at his new school. Sara is anxious to meet new friends in the new neighborhood. The dog is wondering what’s going on. Meanwhile, the parents just want to get it over with!

Phase 4: Turmoil

Your initial Lean implementation is underway. The first work area has finished its inaugural kaizen. Despite its successes, the rumor mill starts to churn, full of dire predictions of job loss — doom and gloom — and another failed initiative. The lunchroom conversation is rampant with dark clouds and reasons why “it won’t work” or “if everyone just waits five minutes, management will be on to something else.” The first crisis hits middle management, and they’re tempted to go back to their old ways. Turmoil is underway. Nothing is settled. Many still doubt management’s resolve to the Lean undertaking. No one is comfortable.

This phase is like the family starting to sort everything out in their new house. Things invariably don’t go exactly as planned. Belongings are misplaced because they don’t have a place in the new house. Boxes are mixed up. The kids are wondering if the parents will crack and decide they can go back to their old life. They’ll be watching closely how the parents handle the situation. The parents’ actions will either enlist or alienate the kids in the whole moving process.

Similarly, in the organization, how management addresses the rumor mill, conducts themselves, and responds in the face of a crisis will either fuel the negative fire or extinguish it to a pile of simmering coals. It is during this tumultuous phase that the tone is set for the rest of the Lean journey.

Phase 5: Integration

Eventually, with commitment and consistency, proper communications and behavior, the organization absorbs the changes and integrates the new direction into its psyche. People climb onboard and buy in to the vision of a Lean organization. Management will have to handle — maybe even dismiss — the small percentage of the organization that refuses to join in.

Particularly because Lean is a journey and not a destination, integration includes an environment of continuous improvement and change. Full buy-in across the entire organization may take years.

Like with the family settling in the new location, unpacking the boxes is really the easy part. Everyone will find a place for their things. How each of the kids adjusts to his new situation will be as individual as the kids are. But with persistence, patience, and communication, eventually they’ll all settle into a new routine — until the next change.

Hurdling roadblocks to success

As with any new undertaking, organizational roadblocks develop along the way. Some of them are cultural, some historical, and some situational. All are rooted in the individuals of the organization and their corresponding perceptions, attitudes, emotions, and actions. In the following sections, we discuss some of the common roadblocks to successful Lean implementation and corresponding organizational change.

Roadblock #1: Rules are made to be broken

Lean is based on the implementation of standards and performance to those standards. It is based on processes being repeatable. You can make improvements only if there is a measurable baseline for comparison. The attitude that “rules are made to be broken” is misaligned with the Lean thought process. If the organization embraces a countercultural attitude, you’ll have challenges on your Lean journey. Some people feel that standards restrict creativity, but this is not the case. The reality is that standards focus creativity and enable you to use your valuable resources to make concrete, repeatable improvements.

Reframe this old adage to a new one: Standards are made to be followed and then improved. Adopting this new adage will go a long way toward mitigating those challenges. You must be vigilant to ensure that people are following the standards. When someone violates a standard, you must understand why, and then eliminate the barrier to compliance with the standard. If it is the standard itself, then revise it in a controlled manner — through kaizen or Plan-Do-Check-Act (PDCA) (see Chapter 9). Standards will always evolve in a Lean organization.

Roadblock #2: Cowboy individualism

No man is an island in a Lean organization. Everyone in the value stream is connected in some way. Cowboy individualists who buck the system, for whatever reason, will inhibit everyone’s Lean journey. There is room for creativity and individualism when you direct it toward the elimination of waste and improvement of the standards. There is no room for those who, on principle, refuse to operate to the methods of standardized work.

Roadblock #3: Fear of the unknown and job loss

People fear the unknown. As Dr. Deming, the American author, lecturer, and consultant, said, “No one can put in his best performance unless he feels secure.” It is management’s job to create a sense of security, using PDCA aligned to the long-term vision to move people through the murky unknown. If management has not made guarantees that employees won’t lose their jobs as a result of productivity improvements, the Lean journey will be a very bumpy ride. You’re asking them to have faith that, by actively participating in Lean, you won’t be rewarding them with a pink slip. It’s one thing to get them to trust that the concepts will work — it’s another thing to get them to trust that it won’t negatively impact their quality of life.

Mature Lean organizations have right-sized their organizations to customer demand. They make the commitment to their permanent employees, and use temporary employees to handle demand fluctuations. These organizations realize that they have invested time and money to develop their people — the most valuable assets for the organization, and it is vital to keep them within the organization. When downturns like The Great Recession of 2008 happen, these organizations do not lay people off. Instead, they use the opportunity to invest even more in their employees via training and to increase efforts to eliminate waste in all aspects of their business, so when demand comes back, they are even stronger and ready to serve their customers even more.

Roadblock #4: Resistance to change — what’s in it for me?

In general, people resist change that isn’t their idea. They may be fearful when it’s their idea, but if they still feel in control, they’ll make the decision to change. But when change is foisted upon them, they feel like they have little or no control, and they may be uncertain about the outcome. Their collective resistance rises up like a tidal wave ready to crash down on the organization, stopping all forward progress. When they do not see a personal benefit or incentive to change, they won’t.

Be sure to paint a clear picture of what you want to change and impact their emotions to enroll them in the process. Imagine you are a purchasing manager who has identified that your organization buys 40 different kinds of safety glasses from 20 different suppliers at a price range of $0.90 to $15.00.You could prepare a report on reducing the variation and waste. Or you could collect all the different pairs from all the different suppliers, tag them with key information, and show off a huge pile of all 800 to the heads of each organization that uses the glasses. Which do you think will have the bigger emotional impact — the report or the pile?

Some of your employees will fight through; you don’t need to worry about them — they’ll be your trailblazers. It’s the ones who can’t overcome their resistance or fears that you’ll need to move forward.

Roadblock #5: Been there, done that

A portion of your organization will be waiting for you to fail, especially if your organization has a track record of failed initiatives, flavor-of-the-month programs, or flip-flopped directions. One of the best ways to mitigate this reaction is to hold your managers accountable to new behavior standards, especially in times of crisis. When the organization sees alignment in the words and actions of their leaders, they are most likely to follow. Also, remember to enlist some of the biggest naysayers early on in the initiative. By winning them over early, you create influential endorsers of the Lean process.

Roadblock #6: If it ain’t broke, don’t fix it

Even when you think your environment, processes and systems work perfectly as is; they are already in a state of decline. The business practices of today are not going to take you to tomorrow. You need to continually invest time to ensure your people, processes, and culture are providing value, are enabling you to understand and meet the voice of the customer and that they are moving in the direction of your ideal future state.

The organization will not move as fast as you want it to. The whole moves slower than the individuals who make up the organization.

Lean State of Mind

Managers in a Lean organization have a different mindset towards what it means to lead. They have and are committed to a long-term vision, as well as short-term (such as quarterly) results. They realize that how the organization achieves results is equally, if not more important, than the actual result itself. They understand that they must behave in a consistent manner, congruent with their long-term vision, independent of the short-term conditions. They realize that their job is not only to achieve results, but also to build capability in their people, so that when problems arise the people know how to respond and solve the right problem. Managers become mentors (more on this in Chapter 4). They also realize the importance of a no-blame culture in a continuous improvement organization to create trust and engagement.

The single most powerful attribute of a Lean organization is adaptability. The Lean journey is continuous; kaizen is continuous; change is continuous; learning is continuous. By embracing the principles of Lean, the organizational culture develops the inherent ability to constantly adapt and respond to events — both internal and external — in a systematic way. Independent of all the specific tools and techniques of Lean, this agility of the people makes the Lean organization as competitive as any type of organization anywhere.

There are no measures by which the Lean organization can declare itself finished. There is no Lean Land, where all problems have been addressed, everyone’s knowledge is complete and all processes are perfect. There is always something else to improve — something better to strive for.

Certain organizational cultures are destination-focused. For them, initiatives are like projects — they have beginnings and ends. The idea that you never finish may be frustrating and difficult for such organizations to grasp. These organizations need to shift their perspective and alter their principles when they commence their Lean journey. They must adopt the cultural predisposition of kaizen.

Unlike traditional organizations, Lean organizations understand that blame improves nothing and prevents true problem solving — kaizen. Creating a culture of understanding and learning is the only way to create a culture of trust and continuous improvement. When people know that management will not persecute them for mistakes, they are more likely to participate in a continuous improvement environment rather than hide their mistakes. For example, if you are trying to reduce accidents in your workplace, your response when one occurs will reflect your beliefs and ultimately your culture. Do you blame the person who had the accident, or do you ask and go see what were the conditions that created the accident?