1 A Perfect Fit for the Chief Engineer Model Jack Billi, M.D. Michigan Quality System: med.umich.edu/mqs Lean Leadership In Healthcare Based on the observations and reflections of UMHS’s teacher, John Shook

2 Lean Transformation Experience so far… –Lean will work anywhere, but Many companies have tried… Not every company is successful, In fact, most aren’t.

3 “Many good companies try to practice kaizen and use various TPS tools. But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner - not in spurts - in concrete way on the shop floor.” -Fujio Cho, Chair of the Board, Toyota

4 Why companies fail in lean transformation Narrow definition –tools –cost cutting, downsizing, outsourcing Broader definition –thinking, systematic, holistic –entire enterprise, business system

5 cartoon copyright © U of M Cherry-picking the tools is not enough The tools comprise a system  Focus on the flow of value to create a system A way of thinking underlies the tools and system Learn the thinking through doing Techniques System Thinking Lean Transformation Some Lessons Learned

Where Do You Start – Either? Both at once? Change Culture First Change System First Lean Enterprise Transformation

The Thinking Production System Just in Time “The right part at the right time in the right amount” Continuous Flow Pull System Takt Time HEIJUNKA Jidoka Production Lines That Stop for That Stop for Abnormalities Abnormalities Automatic Machine Stop Fixed Position Line Stop Error Proofing Visual Control Labor-Machine Efficiency Mutual Trust; Employee DevelopmentRobust Products and Processes Stability; TPM; 5SSupplier Involvement Best Quality - Lowest Cost - Shortest Lead Time Best Quality - Lowest Cost - Shortest Lead Time Through Shortening the Production Flow By Eliminating Waste “Built-in Quality” Standardized Work and Kaizen Standardized Work and Kaizen Getting people to think and take initiative is the key!

8 From “LEAN” to “LEARN” Arguably what Toyota accomplished in its early days that has enabled it to continue to thrive is simply that it learned to learn. But how can we replicate that?

9 The Lean Leader leads: By Kaikaku Dramatic improvements By Kaizen Continuous small improvements It takes a balance of both kinds of leaders to succeed A Look at Leadership at Toyota

10 Leadership: Three Models Ever worked for one of these? Are you one of these?? Older “Dictator” Style: “Do it my way…” Newer “Empowerment” Style: “Do it your way... ” Lean Style: “Follow me, we’ll figure this out together…”

11 Leadership Lessons from Toyota “Lead the organization as if you have no power.” –Kan Higashi to Gary Convis… “Never tell anyone exactly what to do…You remove the responsibility for the outcome.” –Mr Ushikawa to John Shook Lead by being a consensus-builder –on problems, root causes, strategies, countermeasures, plans

12 Leadership at Toyota Responsibility = Authority I expected “bottom-up” decision-making. That’s not exactly what I found. I expected a measure of “top-down” authoritarianism. I didn’t exactly find that either. Rather, I found a dynamic system in which processes were usually well-defined and individual responsibility was almost always clear. “Authority” was rarely an issue – emphasis was on “doing the right thing,” not “establishing one’s rights (authority).” John Shook

13 Prototypical case of responsibility without formal authority: the Toyota Chief Engineer. The Chief Engineer says: “I have no authority.” Everyone else says: “The Chief Engineer is the most powerful person in the company.” They are both right. The CE must lead by: being knowledgeable, often right, fact-driven, an expert negotiator, strong-willed yet flexible, influence/persuasion. Chief Engineer model: helpful in manufacturing; essential in healthcare! Chief Engineer: Responsibility without Authority

14 Chief Engineer or “Shusa” System Body Interior Chassis Elect. HR Body Interior Chassis Elect. HR Eng. Eng.

15 UMHS Chief Engineer System Med Surg Anes Nursing Pharm Med Surg Anes Nursing Pharm Modified from John Shook

16 What is the HFHS Chief Engineer System? Dept 1 Dept 2 Dept 3Unit A Unit B Dept 1 Dept 2 Dept 3Unit A Unit B Modified from John Shook

17 At Toyota, the “burden of proof” is clearly on the subordinate to justify why a proposed action is necessary. Managers in Toyota rarely say “Yes” easily – they usually simply ask “Why?” 1. “Why did things go wrong; what is the root cause?” 2. “Why do you propose that?” A huge difference in determining organizational focus. Each justification is rooted in actual practice, in the results of actual activities. This applies to each and every decision, ensuring true organizational learning at every step. Leadership at Toyota The “Why? Technique

18 Decision-making and all actions revolve around planning and problem-solving. It is assumed that there will be problems, that nothing will go according to plan. “No problem is problem.” For the system to work, problems must be exposed and dealt with forthrightly. Hiding problems will undermine the system. Authority is generated by taking responsibility for problems, building consensus on their causes, the strategies to solve them, and each of our roles in the plan Leadership at Toyota Decision-making Problem-solving

19 Toyota’s way provides extraordinary focus, direction, “control.” No excuses – the flip side of “no blame” While at the same time providing maximum flexibility -- Because no one ever tells anyone exactly what to do. Tremendous reliance on individual initiative Yet, no one can move “freely” without justifying each action to his/her manager. This is a huge difference in determining corporate focus. Leadership at Toyota Control with Flexibility

20 Excuses… Barry Melrose (Canadian Hockey coach): “The coach’s job is to take excuses away from the player – no travel problems, no equipment problems, no bad practices, no bad game plans – so that there is nowhere for the player to look but in the mirror.”

21 Leadership at Toyota P-D-C-A Toyota would say this is nothing more than the P-D-C-A management cycle they learned from Dr. Deming. Yet, this is precisely the thing that most companies can’t seem to do. Why? Surely one major reason for this is the way we lead and manage.

22 The 1:15,000 Dilemma The “Leader as Dictator” of the old days tried to tell everyone what to do. No transfer, or Cascade of Responsibility The “Empowering Leader” of the 80s and 90s just set “goals” and let everyone do as they pleased. (MBO – management by objective) Loss of focus, direction, control Lean Leadership

23 By setting the vision (more why than how) –with nemawashi dialogue, Policy Deployment –and setting challenging expectations at the individual level By building systems and processes that cascade responsibility –Standard Work, Kanban, Stop-the-Line (Andon), 5S as tools that truly empower –HR and HK as broader empowering systems By influence –by example; by being knowledgeable –by getting into the messy details –by coaching and teaching through PDCA learning cycles through questioning The Lean Leader leads a very different way

24 ACTION CHECK STUDY PLAN DO GRASP the SITUATION HYPOTHESIS TRY REFLECT ADJUST P-D-C-A Cycle

NUMMI as a Learning Example : The Business Agreement: Toyota manages the plant and implements the Toyota Production System The Business Case for GM Small profitable car TPS Idle capacity – plant and people The Business Case for Toyota: ?? Results: GM?? Toyota??

The Toyota Way ContinuousImprovement RespectforPeople Best Quality - Lowest Cost - Shortest Lead Time Best Quality - Lowest Cost - Shortest Lead Time Best Safety - Highest Morale PDCA Learning Cycles PDCA Learning Cycles

27 Toyota is Toyota. We can learn from them, but we try to copy them, but we can’t be them exactly (and they’re not perfect, anyway). How can we operationalize the same principles in our own companies? What can we do??

28 A System for Operational Learning What do we know about how people learn? People learn: –Through experience –Through mistakes –Through trail and error How can we build structured opportunities for people to learn the way they learn most naturally? P-D-C-A as a model for OPERATIONAL LEARNING

Problem and PDCA Tools for different levels Key to success: The Mid-management and First Line Supervisory Level FRONT LINES SENIOR MANAGEMENT MIDDLE MANAGEMENT MUST PROVIDE VISION AND INCENTIVE MUST “DO” MUST LEAD THE ACTUAL OPERATIONAL CHANGE Likes the involvement Likes the results Requires tools and support to lead RoleImpact Problem: MUDA PDCA tool: (HK) Policy Management PDCA tool: A3 or VSM PDCA tool: Standardized Work Problem: MURA, MURI Problem: MURI, MURA Shook Muri – overburden Mura – uneven workload Muda – waste HK – hoshin kanri – policy alignment – policy deployment

30 Operational Learning through PDCA Tools How can we build structured opportunities for people to learn the way they learn most naturally? Structured Process for Operational Learning through PDCA at the individual or micro level: Standardized Work & Kaizen. Structured Processes for Operational Learning through PDCA at the individual, mid-management or system level: Value Stream Mapping and the “A3”. Structured Process for Operational Learning through PDCA at the broader organizational level: Policy Deployment (Hoshin Kanri).

31 The challenge of any manufacturing business: Matching capability (capacity) with demand MUDA (Excess) Know your demand Know your true capability (capacity) Create flexibility to enable them to match Demand Capability MURI (Overburden) MURA (Instability) TIME

32 MUDA = Waste MURA = Variation, fluctuation MURI = Overburden 1.Design the system with sufficient capacity to fulfill customer requirements without overburdening people, equipment, or methods. 2.Strive to reduce variation/fluctuation to a bare minimum. 3. Then strive to eliminate sources of waste! Quality first, then cost – first stop shipping scrap System Design to Control the 3 M’s

FOCUS Sr. Mgmt. Front Lines System Kaizen Eliminate Muri and Mura Process Kaizen Eliminate Muda Middle Mgmt. Different Roles at Different Levels

34 Go See. “Sr. Mgmt. must spend time on the plant floor.” Ask Why. “Use the “Why?” technique daily.” Show Respect. “Respect your people.” -Fujio Cho, Chair of the Board, Toyota Three Keys to Lean Leadership

35 What is “Lean”? A true lean system should be: Simple & Practical Consistently solving real business problems –at each level of the company –in each activity of the company –in real time –at the root cause

36 “Data are of course important, but I place greater emphasis on facts.” -Taiichi Ohno “Go see”

37 Mr. Cho: “Know normal from abnormal… - right now” JIDOK JJIIDDOOKKA、自动化A、自动化JJIIDDOOKKA、自动化A、自动化 Best Quality - Lowest Cost - Shortest Lead Time Best Quality - Lowest Cost - Shortest Lead Time 最好的质量－最低的成本－最短的订单交货时间 最好的质量－最低的成本－最短的订单交货时间 Operational Stability and Kaizen Operational Stability and Kaizen稳定操作和持续改善 JI JJIIT”、及时生产T”、及时生产JJIIT”、及时生产T”、及时生产

38 Detect normal from abnormal – right now!

39 Where Do You Start – Either? Both at once? Change Culture First Change System First Lean Enterprise Transformation

40 It’s easier to act your way to a new way of thinking than to think your way to a new way of acting. Lean Transformation John Shook

41 Appendix Billi’s 6 Favorite Slides (What are yours?) The Lean Thinking House (UMHS versions)

42 We know half the plan is wrong, we don’t know which half. We have to watch it unfold, detect normal from abnormal right now, and fix it. Traditional companies think of a plan - as a prediction of what will happen. Lean companies think of a plan - as an experiment to be conducted - to tell us what we didn’t know about the work –Paraphrase of Steven Spear, Fixing Healthcare… HBR’05 Plans are useless, planning is essential. (Eisenhower)

43 A Quick Summary of Lean Thinking Do our work every day in a standard way that we created –Not just the way the work evolved! Be alert to things going wrong –They always do! Fix the problem now –For this patient or co-worker Find and fix the root causes of the problem –So it never happens again! Modified after Spear; Billi Solving problems: –1. Go and See –2. Ask why 5 times –3. Respect people Mr. Cho

44 Lean Thinking is just… …simple and practical, consistently solving real problems in real time, at the source. …not jumping to solutions. …fixing the problem now. …hard on the problem, easy on the people. …leader saying, “Follow me. Let’s look at it together”. …leading by being knowledgeable, fact-driven, expert negotiator, strong willed (for organization’s goals) yet flexible; leading by influence and persuasion. …not telling people exactly what to do. …having individual responsibility clear. John Shook

45 Lean Thinking: Troubleshooting Guide 1.What is the problem? 2.Who owns the problem? 3.What is the plan? 4.What is the current status of the plan? How will it be monitored? 5.What worker training is needed? 6.How does this problem relate to the organization’s most important goals?* 7.What leader development is needed? Adapted from John Shook. Ask questions in order. *As a variation, 6 may be asked second. J Billi

46 UMHS Chief Engineer System Med Surg Anes Nursing Pharm Med Surg Anes Nursing Pharm Modified from John Shook

Problem and PDCA Tools for different levels Key to success: The Mid-management and First Line Supervisory Level FRONT LINES SENIOR MANAGEMENT MIDDLE MANAGEMENT MUST PROVIDE VISION AND INCENTIVE MUST “DO” MUST LEAD THE ACTUAL OPERATIONAL CHANGE Likes the involvement Likes the results Requires tools and support to lead RoleImpact Problem: MUDA PDCA tool: Policy Management PDCA tool: A3 or VSM PDCA tool: Standardized Work Problem: MURA, MURI Problem: MURI, MURA Shook Muri – overburden Mura – uneven workload Muda – waste

Just-In-Time Overview/MQS Philosophy (All Missions) Sources: J. Shook, J. Billi, J. Liker, S. Hoeft, Park-Nicollet /jmk Michigan Quality System MQS UMHS Values: Respect, Compassion, Trust, Integrity, Collaboration, Leadership Built-in Quality

Using the fewest resources to consistently deliver exactly what the customer needs Just-in-Time Built-in-Quality Error-Free Don’t Make, Accept, or Send on an Error MQS House – Master version (All Missions) Sources: J. Shook, J. Billi, J. Liker, S. Hoeft, J. Womack, Park-Nicollet /jmk MQS Make Value Flow by Eliminating Errors and Waste Leveled Workload Continuous Improvement (P-D-C-A) and Learning Standardized Work Michigan Quality System Quality – Safety – Efficiency – Appropriateness – Service Customer Defines Value

Using the fewest resources to consistently deliver appropriate care Right Care, Right Time, Right Setting Just-in-Time Built-in-Quality Error-Free Don’t Make, Accept, or Send on an Error! MQS House (Clinical Mission) Sources: J. Shook, J. Billi, J. Liker, S. Hoeft, J. Womack, Park-Nicollet /jmk Michigan Quality System Safe - Effective - Efficient - Patient-Centered - Timely - Equitable Health Care MQS Make Value Flow by Eliminating Errors and Waste Leveled Workload Continuous Improvement (P-D-C-A) and Learning Standardized Work Ideal Patient Care Experience

Just-in-TimeBuilt-in-Quality QUANTITY QUALITY MQS Error Proof Surface Problems Stop and Respond to Abnormalities Solve Problems at Root Cause Pacing by Demand Continuous Flow Pull Systems Work Force - Skilled, Capable, Flexible - Engaged, Motivated - Design Work, Solve Problems Technology and Equipment - Reliable, Tested - Serve People and Processes - Preventive Maintenance -TPM Materials - Materials Readiness - Supplier involvement Make Value Flow By Eliminating Errors and Waste STABILITY MQS Methods (All Mission) Sources: J. Shook, J. Billi, J. Liker, S. Hoeft, Park-Nicollet /jmk Methods - Robust Processes - Organized Workplace (5S) - Visual Control Leveled Workload Continuous Improvement (P-D-C-A) and Learning Standardized Work Customer Defines Value Michigan Quality System Quality – Safety – Efficiency – Appropriateness – Service