1. Hoshin Kanri Helps Toyota Improve for the Long Term

    October 21, 2014 by nick.halley

    Originally posted by  in Lean Leadership Ways

    When the 2008 Lehman Brothers bankruptcy triggered a global recession, Toyota Motor Company lost money. In December of that year, with a photo of Toyota board members bowing in shame, a New York Times headline trumpeted, “Toyota Expects its First Loss in 70 years.” “They’ve caught the same cold that Detroit has caught,” said Christopher J. Richter, senior analyst in Tokyo at Calyon Capital Markets Asia. “Everything is going wrong for Toyota this year.”

    My reaction was anger at the idiocy of some of these articles. How could Toyota be compared to the Detroit automakers who were on the verge of bankruptcy? Why isn’t the focus on the 70 years of profitability and the huge cash reserves Toyota had piled up for a crisis just like this?

    However, I soon discovered Toyota did not share my point of view. They were very unhappy about their loss. It was not because of the loss of a few billion dollars which they could absorb like an annoying mosquito bite. It was because, through serious reflection, they found serious weaknesses.

    In Toyota Under Fire we chronicle how Toyota responded to the worst global recession since the Great Depression. Of course they downsized, but they did it by reducing a temporary workforce designed to absorb inevitable downturns in the business cycle. Management bonuses and overtime were eliminated. Less energy was used. Travel was reduced. But the jobs of long-term team members were protected.

    I visited two of the hardest hit plants—truck plants in Indiana and Texas—and watched as people frenetically worked even though about half the production workers were not needed for production, with sales down about 40% from planned capacity. They were busy because they had gone from two shifts to one shift, maintaining a high production rate, and about half of the people produced cars for four hours, while the other half observed and worked on kaizen, and then they reversed roles.

    The Japanese executive in charge of the Indiana plant calmly explained that they were investing in the future: “Every winter has its end,” he explained to me. And they were preparing. He showed data on the average age of vehicles and how more were being junked then purchased, and they needed to prepare for the expected sales boom—the boom we are now experiencing.

    Back to the first loss of money in 70 years. Toyota did a great job of utilizing and developing their human resources with very low demand, but their reflection still identified a serious problem. There had been signs the truck market was declining in the United States, where gas prices were rising. There were even signs of the recession to come given the inflated housing market. Yet, Toyota in North America had built months of inventory of trucks. When gas prices almost doubled in the U.S. during the summer before the 2008 recession, Toyota was stuck with enough inventory to stop making any large trucks and sport utility vehicles for three months; during this time they did daily training and kaizen on the shop floor. Then the recession hit and the pain continued.

    Toyota could offset a good deal of the downturn, reducing labor costs by about 20% through eliminating the variable workforce (the temporary pool) and overtime. But still 80% of costs were fixed. The board of directors set a target to reduce fixed costs to 70% so that Toyota, famous for its ability to flexibly respond just-in-time, could be ready for the next downturn.

    Turning this goal into action is one of Toyota’s strengths and it is done through the hoshin kanri process. The target of lowering the break-even point required changes in all parts of the enterprise, including product development (e.g., more standard architecture and parts, value engineering), production control (satisfying customers while leveling the schedule, even with high variety), production engineering (developing simple, slim, flexible systems, often with lower capital investment and more manual work), supply chain (collaborating with suppliers to better respond to flexible volumes), and manufacturing (launching new vehicles more quickly, simple automation for material delivery, parts kitting, changing takt while balancing workload more quickly). Thousands of organizations developed plans for achieving higher flexibility and worked through the kaizen process of experimenting and learning.

    By the time Toyota had achieved the lower break-even and billions of dollars in cost reduction, another problem eased up—the yen went from about 80 yen per dollar to about 110 yen per dollar. Since Toyota is committed to keeping jobs in Japan to benefit Japanese society, and maintain their hotbed of innovation in Japan, they benefited greatly, leading in the 2013-14 fiscal year to the most sales and the most profit of any auto company in history.

    With the huge demand of 2014, and the deep cash reserves Toyota maintains, one might expect a massive spending spree—buying companies, buying new automated equipment, buying new plants in low-cost countries. Toyota did none of those things. They continued belt-tightening and Akio Toyoda announced there would be no new plants built. The hoshin kanri goals became: Do more with less. Find ways to utilize existing capacity while improving throughput, thereby producing more autos per square foot.

    Toyota does not want creeping fixed costs to put them in the same bad situation in the next big economic downturn. They will be ready because of intensive and continuous improvement with a purpose.

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  2. Mindful meetings

    May 5, 2014 by nick.halley

    Dr A. Pavlov and Dr J. Tobias have suggested that the way to handle work meetings is one where the members of the meeting have an ‘engaged areness’ or ‘mindfulness’ You can read their ten steps for encouraging a ‘mindful space’ below in the Management focus magazine of Cranfield University’s School of Management.

  3. Boiling the ocean: How a manufacturer leveraged the criteria to improve its supply chain

    February 8, 2014 by nick.halley

    Originally Posted by Dawn Marie Bailey on Blogrige: The Official Baldrige blog.

    How to Boil the Ocean

    In 2012, Lockheed Martin Missiles and Fire Control (MFC) participated in the Baldrige Executive Fellows Program. As part of the program, John Varley and the other Fellows were given homework: identify a significant challenge in their organizations and use the principles of the Baldrige Criteria for Performance Excellence to achieve significant improvement.

    Varley, vice president for Quality and Mission Success–at the 2012 Baldrige Award recipient that designs, develops, manufactures, and supports advanced combat, missile, rocket, and sensor systems for the U.S. and foreign military–knew that MFC’s most significant area of improvement was the supply chain. Over the past year, the economy had hit the U.S. Department of Defense (DOD) and its contractors hard, and as spending became tighter, the smaller subcontractors in the industry–those who support the large contractors–were hit the hardest.

    According to Steven Sessions, supplier quality director and deputy, Quality Mission and Success, MFC has a multitier supply chain, with suppliers who have subcontractors and so forth, so there are several tiers of suppliers that support MFC. Sessions says when the economy began to squeeze the lower-level, smaller contractors, the tendency was not to lay off the person who created the parts but the person who was in charge of checking the quality of the parts. MFC has contractual relationships with the first line of its supply chain, but how do you assess the risk with lower-level tiers that farm out parts of their work?

    Sessions said that MFC was already working on strategies to address supply chain issues when his colleague came back from a Baldrige Executive Fellows session with the idea for a project that “was pretty startling to colleagues.” Varley’s project focused on how to improve the entire DOD supply chain.

    “[Such a project] was closer to boiling the ocean,” Sessions says. “We have 2,000+ suppliers, and now we would be taking on a project to help companies that are competitors improve their own organizations.”

    “John’s premise was that we either all improve together or all decline together because we are so integrated,” Sessions says. “It was an interesting insight. We tried to figure out how to use the Malcolm Baldrige [Criteria] model to open up doors to companies that five years ago you would never have thought would open their doors to share processes, tools, and techniques on how to improve the DOD supply chain.”

    Sessions added that years ago, the top DOD suppliers like Lockheed Martin were very distinct entities, but now they often act as partners in some programs, competitors in others, and suppliers in still others.

    Based on the Baldrige Criteria, a strategy called Senior Leadership Engagement and Benchmarking was developed by MFC, and MFC’s senior leaders set out to meet with the senior leaders of the other top DOC contractors, getting their commitment around the strategy that we all go up or down together.

    The sharing-ideas strategy really took off, with more than 18 major DOD suppliers and others standing in line to take part, Sessions says.

    “The Malcolm Baldrige Award has made the whole effort take off to the point now where we’re having to leverage seasoned people with more people in the organization in order to keep up with requests,” Sessions says. “The interesting part is that we started out thinking that we are going to be . . . helping [other DOD contractors] improve, and we’ve been able to do that. But out of it, we gained a lot of insight into areas in which we can improve our journey as well. What started out as boiling the ocean, materialized into a real partnership and relationship with some significant companies that are coming up with ideas on how to improve the supply chain that any one of us by ourselves probably would not have been able to achieve.”

    Sessions says that MFC is working on other strategies to improve the overall DOD supply chain in the long term; for example, staff members are working on how to prevent counterfeit parts from getting into its systems. In close alignment with its customer, MFC is teaming with others in the industry to solve this complex, difficult problem.

    Benchmarking Against the Best

    “The Malcolm Baldrige model is a very structured approach to improving your business,” Sessions says, but MFC didn’t turn to the Baldrige Criteria because it needed a framework for improvement. MFC had already won a host of awards, including awards from the Baldrige-based Sterling Award in Florida and Texas Quality Award.

    MFC decided that we wanted to get a good, solid, independent benchmark of where MFC was relevant to its performance, Session says. As they decided whom and how to benchmark, they brought forward the ”world-class” Baldrige Criteria. “We had several ideas of how to benchmark,” he says. “But we wanted to be benchmarked by the best of the best. Our focus was to [apply for the Baldrige Award and] get a site visit and get the outcome of where we stood and where we could improve some more.”

    Sessions says, “As we began to understand the [Baldrige Criteria], we found that it was very similar to our own vision for improvement that we had been using over the past 10 years. . . . The reason people model themselves around the Malcolm Baldrige model is to get that kind of proven, world-class performance. . . . We’ve seen dramatic achievements across the business because our senior leaders had the right premises to line up with the Malcolm Baldrige model.”

    Frank McManus, senior quality leader, MFC, says that when MFC chose to begin using the Baldrige Criteria, “Our leaders wanted us to get not so much the award but the feedback. Having the site visit, with examiners coming to various facilities [and those examiners] representing many different industries and experiences and getting that kind of view [became a] vantage point of how we’re operating and continuously improving.”

    “The examiners were the carrot,” he added; receiving their feedback was incredibly valuable.

    The Right Metrics and Why the Baldrige Criteria

    Sessions said the MFC business model was structured very similarly to the Baldrige Criteria–very focused on the customer and aligned with leadership and every aspect of the organization. A Strategic Enterprise Leadership Counsel reviews the MFC business model to ensure that it aligns with both customer and business needs.

    Key to the MFC business model is having the right metrics to drive performance that align with customers and are tied to every level of the workforce. Similarly, Session says, the Malcolm Baldrige model focuses on customers, with each operational focus tied into a metric system that is aligned with strategic planning and customer needs.

    “That’s the beauty of [such a model],” says Session. “It’s very easy for our leadership team to see where areas for improvement are needed because of the instrumentation we have from the smallest of teams to 16 sites, and it rolls up from all of those organizations to the top. . . . We are very process focused with data-driven decisions, and our customer is the primary focus area. We know if we get it right for the customer, our business will follow. The Malcolm Baldrige model follows all these same tenets–always focusing on the customer with robust processes and data-driven decisions. It was a natural fit.”

    For other organizations, Sessions says the value of the Baldrige Criteria is the structured framework and focus on the customer. “Sometimes companies get too inwardly focused and end up losing sight of [what the customer really needs]. Comparing yourself with other industries and what’s considered the best of the best brings insights.”

    Sessions said that when MFC started with the Baldrige Criteria, “We literally had to flip all of our metrics upside down.” Its performance had gotten so good that it was focusing on just the 1% of parts that were coming in bad, for example. To complete its application for theMalcolm Baldrige National Quality Award, MFC had to flip its model to show the good parts of its supply chain, and this led to interesting observations.

    “When you start to benchmark yourself, it makes you look at metrics differently,” Sessions says. “The whole organization was pretty astonished when it started to pull together metrics in one place [for its Baldrige Award application]. It makes you look back and forward in how you have been performing on your journey and where it would take you. That’s the value [of writing a Baldrige Award application]–that reflection and insight on where we go next.”

  4. The Sponsor as the face of organisational change

    November 25, 2013 by nick.halley

    A large proportion of projects are not given enough executive level attention. Due to this, a large number of projects ultimately fail, as they move further and further away from the business’ core competencies, and strategic alignment between business and project breaks down. In order to overcome this, effective organizations recognize project sponsorship as a key part in any project. It is very important to have active sponsors who support change. Sponsors establish direction for the future, communicate through vision, and forge aligned, high performance teams.

    Dr. H. James Harrington, CEO and Douglas Nelson of Harrington Associates, have written a white paper explaining further how an effective sponsor, who sits at an executive level, can help eliminate the barriers to change and ensure the rapid and effective implementation of project outcomes. Commissioned by the Project Management Institute (PMI), the white paper, outlines characteristics and skills of a strong sponsor, including; power, sense of urgency, vision, public role, private role, and leverage. It includes a small but effective tool for assessing the suitability of a person for a sponsor role.

    The following statement from Managing Change in Organizations: A Practice Guide (PMI, 2013b) provides the foundational concept for this whitepaper.

    “A sponsor provides resources required for change and has the ultimate responsibility for the program or project, building commitment for the change particularly at the senior management level across the organization. Direct responsibility and accountability for the change needs to be clearly defined and accepted at an appropriately high level within an organization. Consequently, the sponsor for a change effort should be someone who has sufficient authority, influence, power, enthusiasm, and time to ensure that any conflicts that could impede the change are resolved in a timely and appropriate fashion.”

    Read the white paper HERE hosted by PMI.

  5. How Mindfulness impacts organisational performance

    November 16, 2013 by nick.halley

    Mindfulness has moved from a largely obscure practice to a mainstream organisational idea in some leading organisations. This purposeful, flexible, and open state of attention and awareness of the present moment has become a significant talking point. The reason? Mindfulness is linked to higher level functioning and people’s increased ability to focus their attention in a dynamic, task-focused way. Its advocates are convinced that it increases performance and it is this link to performance that will be explored.

    What makes mindfulness particularly relevant for work places interested is that it can be trained through mindfulness meditation practice. It is not a genetic trait that some have and others don’t, and instead there is increasing evidence that even brief mindfulness training helps people improve their memory and cognitive ability.

    Researchers are still working on establishing a solid empirical link between mindfulness and organisational performance, but  leaders in top organisations such as Google and Apple have begun implementing mindfulness initiatives for their employees.

    What is mindfulness about?

    Mindfulness is about paying attention with a particular intention: this intention is based on your willingness to give up pre-judgement and certainty, and to bring into your experience of the present moment:

    • A deep curiosity to discover something new,
    • An openness to notice things about the situation, including negative or unpleasant ones, and
    • The flexibility to accept change in the environment or within yourself, rather than resist it.

    How do you become mindful?

    Everyone can practise mindfulness. There are a few things that enable you to become mindful, such as:

    • Slow down.
    • Notice five things about you, or about the situation, good or bad.
    • Ask yourself: What can I learn about the situation?
    • Only then take action.

    This approach is an antidote to overly complex and dynamic environments – it helps people stay present and therefore choose more effective action.

    Mindfulness vs. positive thinking

    The crucial component in developing mindfulness consists of becoming aware of the entire range of thoughts and feelings within you, as you evaluate what is happening in the situation. Counter intuitively, mindfulness enables positive changes in performance not by focusing on the positive, or on those aspects of a situation that you like or appreciate, but by becoming ever more able to welcome into your experience all thoughts and feelings, both positive and negative.

    This is particularly hard during stressful situations. Most people don’t like feeling stressed, and instead avoid the uncomfortable thoughts and feelings that are inevitably part of experiencing stress. This can take inconspicuous forms, for instance, by reacting to an unwelcome voicemail by checking email, or by eating a packet of crisps. The problem: by shutting out of our experience those thoughts or feelings that we deem ‘negative’, we shut ourselves off from noticing aspects about such an unwelcome message that are potentially useful, for example, the tone of voice with which the caller conveyed the message. Noticing whether the caller sounded frustrated or disappointed may help us respond more appropriately, and put to good use the information conveyed through the caller’s tone of voice.

    Practising mindfulness at the individual level is hence akin to developing a mental muscle; more specifically, it is about practising the capacity to become aware, and subsequently use, all information available to you, especially information you would have otherwise shied away from. This is where the power of mindfulness lies: rather than focusing on positive thinking at the expense of noticing what it is that may make you experience stress (and the associated tunnel vision or defensiveness), mindfulness enables you to choose the most effective action in the moment, based on a careful evaluation of all intelligence available to you in the situation.

    Organisational influences on mindfulness

    A question asked less often is: How is an employee’s personal mindfulness practice affected by organisational circumstances?

    This is pertinent to organisational decision-makers because – as ever-keen students of organisational performance, we know that many situational factors influence employee performance (competing demands, job fit between a person’s skills and motivation and the task at hand etc.).

    It is an important question to ponder before going ahead and bringing mindfulness into an organisation also because we understand that mindfulness is more beneficial for task performance when the work environment is complex and dynamic (as opposed to an environment where routine jobs need to be performed on a daily basis).

    A research study presented at the Academy of Management’s annual conference in Orlando in2013, carried out by Jochen Reb and colleagues at Singapore Management University, dealt with precisely this question: how do organisational factors impact employee mindfulness?

    Jochen Reb and his colleagues have carried out a research programme that examines what aspects of mindfulness drive employee performance. In an earlier study, Reb and colleagues found that an organisational leader’s mindfulness affects employee performance because the leader’s mindfulness helps foster employees’ psychological need satisfaction (in other words, their autonomy at work, their perceptions of competence, and the relationship quality with others at work).

    In the study examining the effect of organisational factors on employee mindfulness, (which is forthcoming in the journal Mindfulness), Reb et al discovered that several organisational factors strongly affect the employees’ mindfulness: constraints such as poor equipment, conflicting demands, the employee’s autonomy, and also people factors such as supervisor support. Reb and his colleagues go on to demonstrate that the employees’ mindfulness, as measured by their awareness and attention at work, strongly affect their well-being and their performance at work.

    Implications for raising performance using mindfulness

    What does this mean for people pondering to raise performance through mindfulness training in work settings? Rather than focusing exclusively on helping individual employees to practise mindfulness, we can also make organisations more mindful by (mindfully!) examining contextual factors at work that facilitate or hamper a mindful task focus amongst workers.

    The verdict

    It is early days in understanding how organisations can benefit. More work is needed to understand the organisational constraints affecting mindfulness and its link with performance. We need to widen our lens in this field and shift our focus away from zooming exclusively in on the individual and her cultivation of mindfulness, and towards helping leaders in organisations support their employees more effectively (through mindfulness-based approaches and others) and/or removing situational constraints that make it difficult to practice mindfulness as much as possible. In this way we have a better chance of successfully bringing mindfulness into our organisations.

    This article was republished from Dr. Jutta Tobias at Think: Cranfield

    Dr Jutta Tobias is a lecturer at Cranfield’s Centre for Business Performance. She has a broad interest in behaviour change to help improve people’s performance at work

    Cranfield’s Praxis Centre offers  a 2 day mindfulness open programme, The Mindful Executive: cognitive decision making for the wise  leader and a mindfulness practice is taught on their Fearless Leadership programme.

    For more information contact Mary Mills on +44(0)1234754502, email m.k.mills@cranfield.ac.uk or visit Think: Cranfield