lean and the corporate agenda with guest jacob stoller
TRANSCRIPT
Consultant: We help organizations in all industries deploy Lean & build outstanding organizations.
Author & Speaker:
Karen Martin, President
The Karen Martin Group Inc.
@karenmartinopex
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www.ksmartin.com/subscribe
Jacob Stoller President
Stoller Strategies www.JacobStoller.com
http://amzn.to/1J75O1Z 3 © 2015 Jacob Stoller
Welcome to the land of corporate agendas, where things aren’t always as we’d like them to be!
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Today we will explore…
• The basic language of corporate agendas • Six schools of corporate thinking that stifle lean • Examples of how lean leaders changed the
game • How you can join the conversation about the
needs of your leaders and your business
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© 2015 Jacob Stoller
• Define expectations. • Determine
compensation.
Corporate agendas matter because they…
And they must change for lean to go enterprise wide.
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Much of the agenda is about trying to control how outsiders will judge the organization.
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Proper Financial Priorities
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1. Grow Margins (Profit)
2. Grow Top Line (Gross Sales)
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2011 2012 2013 2014
Gross SalesExpensesProfit
From The Karen Martin Group, Lean And Your Top & Bottom Lines
© 2015 Jacob Stoller
Improving the financial picture
Revenue Future Costs
Variable Costs
Fixed Costs
$ $ $ $
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It’s not just money – balanced scorecard approach
Vision & Strategy
Financial
Internal Business
Processes
Learning & Growth
Customer
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Executive measurement tools
Objectives Where are we going?
Key Performance Indicators (KPIs)
How do we measure success?
Targets How much is enough?
Initiatives How do we get there?
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© 2015 Jacob Stoller
Financial Objective: Reduce operating expenses
KPI: Material costs
Target: Reduce by 6%
Initiative: Get volume discounts
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© 2015 Jacob Stoller
Internal Business Processes Objective: Streamline accounting department
KPI: Days to close at month end
Target: Reduce from 12 to 10
Initiative: New accounting software
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© 2015 Jacob Stoller
Learning & Growth Objective: Improve morale
KPI: Employee satisfaction percentage
Target: Increase from 80% to 85%
Initiative: Employee newsletter, special events
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© 2015 Jacob Stoller
Customer Objective: Increase market share
KPI: Net promoter score
Target: Increase by 5 points
Initiative: Customer service training
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The challenge is that a lot of non-lean thinking gets embedded in these measurements.
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Non-Lean thinking 1. Short-term focus 2. Either/or thinking 3. Disrespect for gemba & people who work there 4. Segmentation of purpose 5. Blind faith in automation & technology 6. Using GAAP accounting to run the business
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1. Short-term focus
• Obsession with annual, quarterly, monthly results.
• Shareholder value is the law. • More emphasis on deal
making.
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Lean is a long-term strategy. 22
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Roots of either / or thinking
Michael Porter’s competitive strategy matrix
Nature of Competitive Advantage
Broad Scope
Narrow Scope
Differentiation Low Cost
Focused Low Cost
Focused Differentiation
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Lean says…
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We can improve these things simultaneously through continuous
improvement.
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4. Segmentation of purpose
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R & D Production Customer Service
Sales
KPIs ≠ KPIs ≠ KPIs ≠ KPIs
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5. Blind faith in automation and technology
• Paving cow paths
• Locking in waste
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6. Using GAAP accounting to run the business
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Shame and blame
Hold managers
accountable for variances
Compare projected
against actual
Manage to targets
Forecast and Set Targets
January February March April?
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Art Byrne’s 10-Year Transformation at Wiremold
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Up 14 Times
Operating Income
Gross Profit
$30M to
$770M
38% to
53%
Valuation
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Art’s Value Stream Metrics
Metric (KPI) Calculation
Customer Service Percentage % of orders delivered on time
Productivity Sales / worker hours
Quality Reduction in defects over previous year
Inventory turns Cost of sales / average value of inventory
Visual control Measured by quality team
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There’s no room for segmentation of purpose or either / or.
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Art didn’t manage the gemba, he managed in the gemba.
• Respect • Empowerment • Trust
© 2015 Jacob Stoller
“Your people are your only asset that appreciates.”
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Thedacare – Dr. John Toussaint
Architect of a new management system for healthcare © 2015 Jacob Stoller 40
In healthcare, either / or spells disaster.
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Defects cost lives… So do delays. Together they account for 30% - 40% of total healthcare spend.
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To solve healthcare’s thousands of problems, we need thousands
of problem solvers.
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Segmentation of purpose is a show stopper, calling for a re-think of physician autonomy.
• Safety over authority • Work standards apply
to everybody
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Northwest Center – Tom Everill
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Adding social purpose to the corporate agenda
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“What I noticed in the corporate world is that nothing is impossible.”
The initial assumption
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“Companies can either make profit or employ people with disabilities.”
? Profit Social Purpose
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Tom’s hypothesis
“Companies can both make profit and employ people with disabilities.”
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The conclusion
“Companies can make higher profits because of their workers’ diverse abilities.”
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Results…
• All divisions profitable. • Revenues up 500% in 3 years. • Tom hopes other employers
will “get it” and put him out of business.
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Looking ahead… • Lots of lean activity
since 2008. • Lean slowly gaining
ground in business schools.
• Better dialogue between lean and non-lean worlds.
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The tide may be turning on…
• Shareholder value • Accounting practices • Tolerance of waste • Hierarchical management
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• Study lean as a management system. • Learn about business issues in your sector. • Join the broader conversation.
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Jacob Stoller President
Stoller Strategies www.JacobStoller.com
http://amzn.to/1J75O1Z 54 © 2015 Jacob Stoller
Karen Martin, President @karenmartinopex
Blog & newsletter: www.ksmartin.com/subscribe
© 2015 Jacob Stoller 56