Creating the Agile OrganizationApril 2013Rich Gildersleeve and Jerry Wright

Never Stop Getting Better®

Agenda

• Brief overview of DJO Global• The need for speed and agility• Agile/Lean characteristics, the top 8 list• Agile/Lean exercise – Lean NPD• Agile characteristics (continued)• Exercise: Making Your NPD More Agile

DJO Global Statistics:• $1.13 Billion in Sales for 2012• Approximately 5,370 employees• Products sold in more than 80 countries• Over 140,000 units manufactured daily• More than 35,000 sellable products• More than 1 million square feet of operating space

• More than 12,000 orders shipped per day• The largest orthopedic rehabilitation

company in the world• 8th largest orthopedic company in the world• Largest privately held company in San Diego

DJO Global Locations

Vista

Tijuana Austin

Mississauga

Indianapolis

Arden Hills, Shoreview

Clear Lake

GuildfordMalmo

Sfax

Mouguerre

Herentals

Freiburg

Milan

Sydney

Ecublens

Hong Kong

Cape Town

Asheboro

Mequon

Barcelona Shanghai

Best Practice / Benchmark Operations

The Need for Speed

Every Day on the Serengeti Plain!

…It’s not the big that (b)eat the small, but the fast that (b)eat the slow.

Need for Change?

“It is not necessary to change. Survival is not mandatory.”

Dr. W. Edwards Deming 

Lean/Agile Characteristics• Continuous improvement culture• Learning organization• Strategic and operational portfolio planning• Appropriate use of technologies• Metrics used to reward appropriate behaviors• Decisions made quickly • Bureaucracy minimization• Suppliers and vendors moving fast

Company Culture

Continuous Improvement CultureA continuous improvement culture is much more important than any agile or lean tool or technique we will be discussing today. Such a culture allows limitless potential to unfold. Without it, as new tools are implemented, success rates will be reduced and improved processes may regress.

Visual and interactive methodsEngagement throughout organizationWalk the talk with metricsReward appropriate behavior

What is the Culture of Your Company?Choose 3-5 key words that describe your company’s culture. Do you think it is a good culture that should be emulated by other companies? Or do you think it needs work?

Open / Accepting –OR- Closed / Confidential?Fast-paced / nimble –OR- methodical / steady?Very power-oriented –OR- independent / free?Easy to change –OR- difficult to change?Innovative / try things –OR- Keep to yourself?

Continuous Improvement• How does your company handle a business process

that is too slow, costly or error prone?• • Who points out problems that need to be fixed?

• Who fixes the problems?

Problem SolvingTRADITIONAL METHOD

Slow and UnsureAnalyze

Recommend

Decide

Implement

Change

ImplementationTeam

Employees

Management

AnalysisTeam

MO

NTH

S

AnalysisTeam

KAIZEN BLITZMSH!Analyze

Run Trials

Make Change

Implement

BlitzTeam

3 D

AYS

KAI• To break apart• To change

ZEN• Study• Make better

KAIZEN Continuous Improvement Reduce waste aggressively,

methodically and continuously Involve everyone in solutionBLITZ = Lightning Fast!

Continuous Improvement Culture

Fundamental Principle of Kaizen• Tasks that transform information and

raw materials into products that meet customer needs are value-added

• Everything else is waste and must be reduced or eliminated

• Waiting in line (queuing)• Patents• Labor routings• BOMs• Innovation• Sample production• Tooling• Post-release follow-up• Sign-offs and reviews

Value-adding or Not?• Financial analysis• Project prioritization• Customer values• Project planning• Design• Capital requests• ECOs• Testing• Design loops

Incorporating ‘Lean’ leaves more time for innovation and risk taking

What is Lead Time?

The best way to describe lead time is to press a start button when a project starts and then press the stop button when it is finally released for sale.

Lead Time is the total elapsed time that ittakes that product to make it from to idea to realization and ready for sale/shipping to customers.

Lean/Agile NPD (Reduce Lead Time)

Non Value Adding NVA

12 Months - 80%

VA

1 Month - 10%

Typical ratio of value-adding NPD activity

Decrease lead time radically by focusing first on reducing non value-adding activity!

If focus is only on reducing NPD value-add activities

Non Value Adding NVA VANVA VA

Project Lead Time12 Months960 3 15

14 Months - 93%

Updated: 05/08/12

Holistic Product Development

Customer Immersion for Market Awareness

ProductDevelopment

Sustaining Engineering

Well-receivedOfferings

Continual Post-release Learning

Strategic Portfolio Planning

Internal OfferingStrategies & Structure

Industrial Immersionfor Tech Awareness

Company Vision and Mission

TechnologyAdvancement

Updated: 05/08/12

Customer Immersion for Market Awareness

ProductDevelopment

Sustaining Engineering

Well-receivedOfferings

Continual Post-release Learning

Strategic Portfolio Planning

Internal OfferingStrategies & Structure

Industrial Immersionfor Tech Awareness

Company Vision and Mission

TechnologyAdvancement

Updated: 05/08/12

Holistic PD and Key Processes

Customer Immersion for Market Awareness

ProductDevelopment

Sustaining Engineering

Well-receivedOfferings

Continual Post-release Learning

Strategic Portfolio Planning

Internal OfferingStrategies & Structure

Industrial Immersionfor Tech Awareness

Company Vision and Mission

TechnologyAdvancement

Ethnography

LAMDA problem solving

Knowledge gaps-capture

Set-based design

Protostorming learning cycles

Customerstorming

VOC

Critical customer interests

Stage-Gate

Value stream mapping

Scrum-sprints

Technology mapping

Intellectual property

Customer Orientation

Tech

nology Leve

rage

Innovation EnhancementValue-add O

ptimiza

tion

Prototyping

Kaizen blitzes

Advanced conceptualization

Metrics

Resource KanBans

Project management

A3s, processes

Vendor and Univ partnerships

New materials and techs

Field testing

Updated: 05/08/12

Holistic PD and Key Processes

Customer Immersion for Market Awareness

ProductDevelopment

Sustaining Engineering

Well-receivedOfferings

Continual Post-release Learning

Strategic Portfolio Planning

Internal OfferingStrategies & Structure

Industrial Immersionfor Tech Awareness

Company Vision and Mission

TechnologyAdvancement

Ethnography

LAMDA problem solving

Set-based designProtostorming

learning cycles

Customerstorming

Field testing

Stage-Gate

Value stream mapping

Scrum-sprints

Technology mapping

Intellectual property

Customer Orientation

Tech

nolog

y Lev

erage

Innovation EnhancementValue-add O

ptimiza

tion

Prototyping

Kaizen blitzes

Advanced conceptualization

Metrics

Resource KanBans

Project management

A3s, processes

Knowledge gaps-capture

mature working process

newer or needs tuning

difficulties, likely need a blitz

New materials and techs

Vendor and Univ partnerships

Critical customer interests

VOC

“The only real mistake is the one from which we learn nothing.” John Powell

Learning

Learning and innovating: some ironies

No Problems here!

Test to specs!

Celebrate the discovery of

problems

Broad specs are OK to start, but don’t waste

time developing refined specs. Instead

learn first

I have the solution!

Root cause/learning,

countermeasures

Innovation enhancement

Resist jumping to conclusions, acting too soon

Uncover true root cause for lasting

change (LAMDA). Explore many options for optimal innovation

Get VOC completed so we can start design!

VOC is a journey, not a one-stop visit

Many VOC checkpoints

throughout cycle, single feature

feedback, trade-offs

Learning: Filling Knowledge Gaps

A few of the many unknowns in developing a new product• Marketing: Which features are important to our customers?, value proposition?,

volume?, pricing?• Engineering: Optimal component and/or assembly design?, manufacturing

methods? • Manufacturing: Cell design?, PM schedules?, training?, VWIs?, root cause

analysis of low FPY and/or field failures?

Some tools to facilitate learning and to fill these knowledge gaps• A3 thinking, often employing LAMDA• Set-based thinking• 5 whys• Fishbone diagrams• Problem analysis trees• Strategy canvases

What is GEMBA?

GEMBA is a Japanese word that means the actual place or where things are happening. For most of us this is where the work takes place.

The “Ohno” Circle

Taiichi Ohno was a founder of the Toyota Production System. He used the “Ohno” circle to force going to GEMBA and observing. Why is this important for R&D?

What is an A3?Crisp, objective, visual and interactive general purpose tool developed by ToyotaSo named because they fit an A3 size of paperThe processes used to develop specific A3s are as important as the A3 itselfEngender a style of…

…thinking that is rigorous and thorough…communication that focuses on hard data and vital information…problem solving that is collaborative and objective

Types of DJO A3sKnowledge captureProblem solving with LAMDAVoice of the Customer (VOC)Project ManagementVendor background and capabilitiesNew conceptsTechnology mappingAnd so much more….

COMPANY CONFIDENTIAL

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LAMDA Problem Solving: The Cycle of Knowledge Creation

LAMDA: Look, Ask, Model, Discuss, ActGemba visits, go see!Expert input, asking “why?” and “who?”Modeling to fill knowledge gaps and uncover true root cause(s) Discussions regarding LAM phases to discuss root cause(s) and appropriate countermeasuresImplementation and follow-up check lists

Similar to PDCA: Plan, Do, Check, ActDid we visit the Gemba and talk to the many stakeholders? Did we start Doing well before understanding root cause and effectiveness of countermeasures?

Somewhat similar to DMAIC: Define, Measure, Analyze, Improve, Control

Did we quickly get to the Gemba and gather expert input?Appropriate for “simple” issues?

COMPANY CONFIDENTIAL

33

LAMDA by itself is just a nice tool, an instrument It takes a trained and proficient

user to make the tool sing…

….and a conductor, or mentor, to achieve optimal effect

Recent Knowledge Generation Example: Iceman Foam Filling

Problem solving with start to finish story telling

A3 structure with LAMDA integration clarifies thinking

Mentoring, drafts, reviews• Multiple reviews• No speculation or guessing allowed• Show what didn’t work, as well as what worked

Knowns

Distance to hole: 150 yards

Distance for irons:

6: 170 yds7: 150 yds8: 135 yds

Ask: Expert input (local pro)

Wind: In face 10mph (+10 yds)

Grain: Left to right (+5 yds)

Slope: Back to front (+20 yds)

Look: Gemba visit

Dew: Reduces slope effect by 50%

5

5

1 2

3 4 5 6

7 8 9 10 11

12 14 15

16 17

Start here

13

5: 180 yds Model: PlayBest score yet, but noticed cold morning air (+5 yds)

You visit a clubhouse one afternoon and book a tee time for early the next morning. Are you prepared for our one hole course?

Exercise #1: LAMDA problem solving

• Past problem• Name an instance where ‘solution’ was less than ideal?• Did you jump to conclusions?• Would LAMDA process have helped?

• Current problem• What difficult problem are you now facing at work?• Are there knowledge gaps?• If so, will LAMDA help you avoid the common traps?

Technical knowledge capture A3 example

New Concept A3 example

39Company Confidential

Many companies launch product or service design efforts based on whatever knowledge they already have about customer needs from questionnaires, focus groups, the opinions of marketing staff and senior engineers … and sometimes the CEO. Often this information is more opinion than data. Teams read through this existing customer information, whether it is relevant to the current project or not, then dive directly into design work. Then, the company has little or no further contact with customers until the product or service is released into the marketplace

In this model, customers are not engaged in the initial development of the ideas or prototyping efforts. The risks of this non-data-driven approach are evident. This pattern provides just one feedback cycle from the market – and it comes after all development costs have been spent and change is extremely expensive. At this juncture company officials say things like, "The customers do not understand all our features." "They treat us like a commodity." "They do not recognize the value of our differentiation." Yet the fault lies with the company, not with customers.40

Companies that have advanced their voice of the customer (VOC) methods to the next level have dozens, if not hundreds, of VOC cycles built into their development processes. They do a lot of quick back-and-forth cycles with customers throughout the design phases, incorporating detailed customer preference information in analysis of trade-off decisions.

To get a deeper understanding of customer needs, innovative companies have explored two ideas – rapid prototyping and tools for making design trade-off decisions.

41

GEMBA and VOC

For most companies, customer interaction takes place over dinner or in a meeting room between Sales and Marketing and the actual customer. When it comes to VOC where is GEMBA? What might most companies be doing incorrectly?

Key takeaway: Bad process – no customer interaction except at beginning and end of project. Little Gemba interaction. Good process – interaction with customer throughout the development cycle. Frequent Gemba visits.

VOC Tracking A3 example

43Company Confidential

Project Tracking A3 example

Interactive A3 posting boards

Innovating

Cherish your visions and your dreams as they are the children of your soul, the blueprints of your ultimate achievements.

-Napoleon Hill

Set-based Design• Moves us from thinking in instances to thinking in spaces

• Needed when there are knowledge gaps

• Convergence: long lead first, short lead last

ProtoStorming™• AKA set-based design, learning cycles etc.• Investigating more alternatives early on to optimize the ultimate

design and mitigate design loops and risk• Later design freezes now OK, and don’t hurt development cycle

times• Helps eliminate false starts as well as the product developer’s all too common

lament: “if marketing could only get the design specs correct at the beginning of the project, we could do our jobs and deliver a great product”

• DJO has used protostorming for large scope and technically challenging projects since the early 2000s.

ProtoStorming™ Details• Gather about 10-20 motivated people• Brainstorm product or issue for about two hours• Break group into three or four teams• Have each team select one or two brainstorm ideas for development,

exploring business issues as well as developing tangible prototypes• Regroup and report out after about four to eight hours of work• Plan next four to eight hours of work (plan, design, build, test, review)• Final report out• Winning ideas move into pipeline, or have accelerated concept

development phase

ProtoStorming™: Accelerating the concept development phase

• Brainstorming combined with rapid prototyping in a blitz-like atmosphere

• Small, passionate teams• Outsiders involved• More ideas investigated in a

shorter time period• Reduced dependence on design

specs• Technology helps

• User interface excellence• Venaflow Elite for DVT/PE prevention

Customerstorming™

Invention Day

Goal: Allocate time to explore new ideas, solve tangential problems, get mind off of your day jobFrequency: Full day, recurring once every monthMethod:

Idea preview at start of day for input and collaborationReport-out at end of day for tractionPosted on visual “future products” board

Exercise #2: Blitzing a NPD Process

Roles Needed (per team):• Project Manager• Design Engineer• Marketing• Manufacturing Manager• Quality Manager• Purchasing Agent• Document Control• Production Worker

Exercise Basics:• Make new product using non-

lean process (e.g. no GEMBA, VOC, learning, scrum-sprint)

• Measure lead time• Make NPD Process more agile• Make another new product• Re-measure lead time• Further improvements?• If yes, repeat one more time• Each team competes to improve

process and beat competition

Exercise #2 Take Home Notes

• Does this exercise apply, on a larger scope basis, at your company? Why?

• Where do you see this occurring at your company?• What changes could you suggest at your company?

Decision Making• “If you can’t make the right decisions quickly and

effectively, and execute those decisions consistently, your business will lose ground.”

• “A good decision executed quickly beats a brilliant decision implemented slowly.”

Paul Rogers and Marcia Blenko, Who has the D?, Harvard Business Review

Decision Due Diligence: 5 Whys Example

Problem: Puddle of oil on factory floor

• Why? Machine is leaking oil• Why? Machine has a broken gasket• Why? We bought gaskets made from a cheap material• Why? Purchasing agents are rewarded and evaluated based on

short-term savings rather than on long-term performance• Why? Our purchasing processes haven’t considered lifetime costs

Blitzing the purchasing processes will yield the best benefit, not cleaning up the oil spot or replacing a gasket

Metrics

Why Have Metrics?

• Ever go to a baseball or football game without a scoreboard?

• What’s the first thing someone arriving to the game wants to know?

• In new product development, how do you know if you are winning?

Which Measures: How Many?

• What you measure depends on your business; however, only measure what you can influence or control

• More than 7 key metrics for an organization is usually too many

• Do measure lead time on NPD projects in order to drive speed to market

Rewarding Success / Winning

• Assuming you hit your goals that you measure, how do you reward success?

• What’s important to people in regard to rewards (hint – only 14% say salary is #1)

• Most good (agile) companies use multiple means of measurement and reward to reinforce the desired behaviors

Compensation / Rewards Rank• Stability of job (21%)• Health Benefits (20%)• Work/life Balance (14%)• Salary (14%)• Financial/Retirement Benefits (11%)• Other (20%)

Source – USA Today, February 2, 2011

Other Rewards / Recognition

• Recognition by Senior Management, Peers

• Team rewards for team efforts (events, dinners, gain-sharing, etc.)

• On-the-spot bonus

• “Thank you for such a good job on project XYZ.”

Design Processes

• Gantt charts, right or left hand driven, checklists, 1920’s to present

• Stage-gate, late 1980’s to present

• Protostorming, Learning cycles, Set-based design, Knowledge driven design, 2000’s to present

R&D Process Evolution

DueDiligence

ConceptDevelopment

Detailed Design Tooling Launch

Pros• Clearer understanding of tasks and

optimum chronology• Bottle necks become more obvious• Development rhythm• Improved communications

Cons• Dependent upon high quality due diligence• System doesn’t speed up innovation

process: knowledge gaps not clearly identified and filled

• Potential for speed bumps if dogmatically implemented

• Not a clear picture of project status

Opportunity• Learning and innovation

enhancement• Decrease dependence on early due

diligence. Face it, it is detrimental to try to “spec” every detail at the front end of a project. Specs are better thought of as the documentation of learning/testing

• Speed cycle times• Improved representation of project

status

Pros and Cons of Stage-Gate

OACR & Financials FMEA

Component Dwgs Assembly drawings & BOMs

Launch PackageProduct Labels, IFUBio Eval

Report

DOC

Annex 1

Fill Knowledge Gaps

Schedule & core team

Product Development Flow Chart

Design Input vs Output

1st Article Testing

Design Knowledge

Generation Review CEA Approval

RA Requirements

Test Plan

Work Instructions

PFMEA

Fill Knowledge Gaps

Cell Setup & OQ

Manufacturing Knowledge

Generation Review Production

Release

Marketing Knowledge

Generation Review CLT Approval

KNOWLEDGE GENERATION > > >

Fill Knowledge Gaps

Fill Knowledge Gaps

DFM

Quality Knowledge

Generation ReviewSales Release

Marketing: YellowDesign: BlueManufacturing: GreenQuality: PinkRegulatory: Red

CRITICAL PATH > Final Design Development PQ Parts Pilot Build Build Inventory Tooling FAI Design Input

Preliminary Testing

Quality Plan

Exercise: Applying Lean Thinkingto Your Next Project

• Break into groups by existing agility level• Brainstorm techniques to reduce lead time on your next (or current

project)• Agree as a group on your top 5 and rank in order of importance• Choose a speaker to share your list with the other groups

Review: Lean Characteristics• Continuous improvement culture• Lean methods (e.g. A3 thinking, GEMBA, LAMDA, learning)• Decisions made quickly • Metrics used to reward appropriate behaviors• Suppliers and vendors moving fast• Strategic and operational portfolio planning• Appropriate use of technologies

For More Info:

Rich Gildersleeve, P.E.Chief Technology Officer

Senior Vice President, Global R&DDJO GLOBAL, Inc.

rich.gildersleeve@djoglobal.com760-734-5665

Jerry Wright, P.E.Senior Vice President

Lean and Enterprise Excellence DJO GLOBAL, Inc.

jerry.wright@djoglobal.com760-734-5690