2 Consultant: We help organizations in all industries deploy Lean & build outstanding organizations.

Transcription

1 1 Consultant: We help organizations in all industries deploy Lean & build outstanding organizations. Author & Speaker: Karen Martin, President The Karen Martin Group 2 1

2 Jacob Stoller President Stoller Strategies Welcome to the land of corporate agendas, where things aren t always as we d like them to be! 4 2

3 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 5 Corporate agendas matter because they Define expectations. Determine compensation. And they must change for lean to go enterprise wide. 6 3

4 Much of the agenda is about trying to control how outsiders will judge the organization. 7 Money will always be an underlying issue in every corporate agenda. 8 4

5 A few words about not for profits Yes, this means you! 9 Proper Financial Priorities 1. Grow Margins (Profit) 2. Grow Top Line (Gross Sales) Gross Sales Expenses Profit From The Karen Martin Group, Lean And Your Top & Bottom Lines

6 Improving the financial picture Revenue Variable Costs Fixed Costs Future Costs $ $ $ $ 11 It s not just money balanced scorecard approach Financial Customer Vision & Strategy Internal Business Processes Learning & Growth 12 6

7 Executive measurement tools Objectives Key Performance Indicators (KPIs) Targets Initiatives Where are we going? How do we measure success? How much is enough? How do we get there? 13 Financial Objective: Reduce operating expenses KPI: Material costs Target: Reduce by 6% Initiative: Get volume discounts 14 7

8 Internal Business Processes Objective: Streamline accounting department KPI: Days to close at month end Target: Reduce from 12 to 10 Initiative: New accounting software 15 Learning & Growth Objective: Improve morale KPI: Employee satisfaction percentage Target: Increase from 80% to 85% Initiative: Employee newsletter, special events 16 8

9 Customer Objective: Increase market share KPI: Net promoter score Target: Increase by 5 points Initiative: Customer service training 17 There s some good news here 18 9

10 And some bad 19 The challenge is that a lot of non lean thinking gets embedded in these measurements

11 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 Short term focus Obsession with annual, quarterly, monthly results. Shareholder value is the law. More emphasis on deal making. Lean is a long term strategy

12 2. Either / or thinking Cost Quality Profitability Market Share 23 Roots of either / or thinking Nature of Competitive Advantage Broad Scope Narrow Scope Low Cost Focused Low Cost Differentiation Focused Differentiation Michael Porter s competitive strategy matrix 24 12

13 Lean says We can improve these things simultaneously through continuous improvement Disrespect for gemba and people who work there Innovate Produce Sell 26 13

14 Lean says Production creates the value that people pay us for Segmentation of purpose KPIs KPIs KPIs KPIs R & D Production Sales Customer Service 28 14

15 Lean says We re all in the value stream together Blind faith in automation and technology Paving cow paths Locking in waste 30 15

16 Lean says Fix the process first! Using GAAP accounting to run the business January February March April? Forecast and Set Targets Manage to targets Compare projected against actual Hold managers accountable for variances Shame and blame 32 16

17 Lean says What a waste of time! 33 Changing the Corporate Agenda 34 17

18 Art Byrne s 10 Year Transformation at Wiremold Up 14 Times Operating Income 38% to 53% Gross Profit $30M to $770M Valuation 35 Art s Value Stream Metrics Metric (KPI) Customer Service Percentage Productivity Quality Inventory turns Visual control Calculation % of orders delivered on time Sales /worker hours Reduction in defects over previous year Cost of sales / average value of inventory Measured by quality team There s no room for segmentation of purpose or either / or

19 Art vs. short term thinking From 3 to 20? The big leap of faith 37 Art vs. GAAP Accounting Real numbers, simple format (Orry Fiume) 38 19

20 Art didn t manage the gemba, he managed in the gemba. Respect Empowerment Trust Your people are your only asset that appreciates. 39 Thedacare Dr. John Toussaint Architect of a new management system for healthcare 40 20

21 The Healthcare Conundrum Financial Pressures Unacceptable Outcomes 41 In healthcare, either / or spells disaster. Defects cost lives So do delays. Together they account for 30% 40% of total healthcare spend

22 To solve healthcare s thousands of problems, we need thousands of problem solvers. 43 Segmentation of purpose is a show stopper, calling for a re think of physician autonomy. Safety over authority Work standards apply to everybody 44 22

23 Northwest Center Tom Everill Adding social purpose to the corporate agenda What I noticed in the corporate world is that nothing is impossible. 45 The initial assumption Companies can either make profit or employ people with disabilities. Profit? Social Purpose 46 23

24 Tom s hypothesis Companies can both make profit and employ people with disabilities. 47 Companies can make higher profits because of their workers diverse abilities. The conclusion 48 24

25 Results All divisions profitable. Revenues up 500% in 3 years. Tom hopes other employers will get it and put him out of business. 49 Lots of lean activity since Lean slowly gaining ground in business schools. Better dialogue between lean and non lean worlds. Looking ahead 50 25

26 The tide may be turning on Shareholder value Accounting practices Tolerance of waste Hierarchical management 51 Study lean as a management system. Learn about business issues in your sector. Join the broader conversation

27 At the end of the day. Lean has better answers! 53 Jacob Stoller President Stoller Strategies

28 Questions and Comments? 55 Karen Martin, Blog & newsletter: