Managing On Purpose John Shook Chairman and CEO Lean Enterprise Institute, USA Chairman Lean Global Network Lean Institute Turkey December 3, 2013 Bursa, Turkey

The State of “Lean” 2013 We intend to make the world a better place through Lean Thinking & Practice –25 years of “lean”, 50 years of TPS, 100 years of “flow” We’ve won some battles –Auto industry –Healthcare –New frontiers

State of the LIT Summit 2013 Great progress since my first visit –Excellent presentations from Turkish cos. –Management level, operations level –New sectors and new regions Important conversations I heard: –Worker-management divide –National and corporate culture –Terminology – word games –Lean Transformation – how? –“How to make” – “what to make” – “why to make”

Purpose Achieved through Processes and People Aligned by Management 4 Today

New United Motor Manufacturing, Inc. – NUMMI – built its first car in December 1984 and its last on April 1, NUMMI kick-started a revolution.

Joint Venture

Lean Success in North America Agreement between Toyota and GM: Toyota manages the plant via the Toyota Production System GM’s “worst” (certified worst) plant: Quality Workforce Former GM workers offered jobs: Including the old “troublemakers”

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Results In about one year… Quality Best ever in GM Equal to Takaoka Japan Productivity Best in GM Close to Takaoka Japan

Employee development: Some Classroom Mostly OJT or OJD TPS established: Technical- Physicals, “hard” technology - Product, plant layout, etc. Social- “Soft” technologies - Management/people systems (Note: “soft” doesn’t mean “easy”!)

“Establish mutual trust” “No problem is problem” “Lead as if you have no power” “Before you build cars, build people” Four lessons in leadership from NUMMI:

It is an Organizational and A Personal Transformation.

Lean Leadership …is obviously different from the old command and control dictator.  You can see that quickly It is equally different from the commonly accepted notion of the “enlightened modern manager”  That part is less obvious

Get each person to take responsibility to solve problems and improve his or her job Ensure that each persons’ job is aligned to provide value for the customer and prosperity for the company  Begin with yourself! 15 Define Your Purpose Improve the Work, Develop the People

Leadership Styles 16

Lean vs Traditional Leadership RESPONSIBILITY-BASED Focus: Make the Right Decision AUTHORITY-BASED Focus: The Right to Make the Decision

GM Fremont  What went wrong?

GM Fremont  What aligned business purpose?

Lean is a management system! to align: Process People Purpose to create value

Lean Enterprise Transformation Model What’s the PURPOSE? How to improve the work? How to develop the people? What leadership role and management system? What’s the BASIC THINKING?

The Toyota Production System Just in Time “The right part at the right time in the right amount” HEIJUNKA Jidoka Production Lines That Stop for That Stop for Abnormalities Abnormalities 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” Stability and Kaizen

The Toyota Way ContinuousImprovement RESPECTForPEOPLE Customer First Customer First Challenge – Kaizen – Genchi Genbutsu Respect - Teamwork

Lean Transformation Model PROCESSIMPROVEMENTContinuous, real, practical changes to improve the way the work is done CAPABILITYDEVELOPMENTSustainableimprovementcapability in all people at all levels SITUATIONAL APPROACH SITUATIONAL APPROACH - Value-Driven Purpose - “WHAT PROBLEM ARE WE TRYING TO SOLVE?” Basic Thinking, Mindset, Assumptions Basic Thinking, Mindset, Assumptions That drive this transformation ResponsibleLeadershipMANAGEMENTSYSTEM

WHAT is our PURPOSE? What situational problem do we need to address? How to improve the work? How to develop the people? What is our BASIC THINKING?? What leadership behavior and management system do we need?

Transformation Model Questions 1.What is our purpose or what problem are we trying to solve, what value to create? 2.How do we improve the actual work? 3.How do we develop the people? 4.What role must leadership take and how does the management system support the new way of working? 5.What basic thinking or assumptions underlie this transformation?

Lean Transformation FMEA Failure Mode and Effects Analysis

Transformation FMEA Quick-Check FAILURE MODEEFFECTCAUSE PURPOSE PROCESS PEOPLE LEADERSHIP THINKING

Transformation FMEA Quick-Check (examples) FAILURE MODEEFFECTCAUSE PURPOSEAgreementConflicting policies Poor communication PROCESSQualityMuch scrap and rework Workers and leaders rely on final inspection PEOPLERight skill levelsDon’t perform jobs properly Unclear hiring standards; no standard training LEADERSHIP??? THINKING???

State of the LIT Summit 2013 Terminology “alphabet soup” –TQM –WCM (World Class Manufacturing) –TPS –Toyota Way –Six Sigma –Lean Startup –Japanese terms – two that matter  KAIZEN  GEMBA

Lean…

People & Process – aligned by leaders to achieve purpose

Lean Enterprise Transformation Model What’s the PURPOSE? How to improve the work? How to develop the people? What leadership role and management system? What’s the BASIC THINKING?