The importance of driving the right metrics:
Metrics drive behavior... We all heard that, right? They actually do not, they simply get reported on. Rather, "cultural metrics" actually drive behavior. The difference between the two is subtle but drastic. Cultural metrics are the ones your business focuses on and spend 90% of your efforts, deep dive or meeting times on.
There is no doubt that Lean as a mindset and methodology can drastically improve the operations of a business. Many organizations say they focus on Safety, Quality, Cost and Delivery... But do they?
Through my career I have been lucky enough to work with and be coached by great Senseis such as Sensei Nakao and Sensei Koide, who were part of the original Lean transformation at Toyota.
They were definitely not shy about holding people true to the Toyota Lean principles and reminding the people they coached that at the center of any Lean transformation, lies the operator or employee. Improve the quality of their processes and the rest follows. Too many organizations deploying lean tools forget this.
In my article on the Foundation of Lean (see link at the bottom of this post or in my profile), I talk about the importance of remembering why we do lean: to make our employees' jobs easier. It is because we remove waste out of processes and make their jobs easier by improving the quality of their processes, that our employees can then perform the same job in less time because they are not waiting on QA inspections, materials, have simpler work instructions, ... as a result the Moral improves, which also drives improvements in Safety, Quality and Delivery, as well as reductions in costs.
Organizations that remember this and stay true to it, do well.
Unfortunately, I have seen through my career, a number of organizations that used Lean as a shortcut to increased profitability. Time and time again, I have seen projects focus on reducing costs without attempting to do proper root cause analysis or focus on the drivers of these costs.
I have seen organizations that believed themselves to be world class have hundreds of parts in MRB ("Quality jail"), aged for several months, and not even have a weekly report to understand the main reason for defective parts.
I have had "Lean" bosses tell me that projects were taking too long (>30 days) and that we did not need to do a proper 5 why analysis, but rather stop after 1-2 whys... this despite the fact that we taught proper 5 why analysis in training.
When I looked into what was driving that behavior, a few things became evident:
1. Lack of truly experienced Lean Leaders in key positions
2. Management focus on cost and profitability metrics
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While some organizations I worked with, on paper had bonus payments based on 25% Safety, 25% Quality, 25% Delivery and 25% Cost, the reality was that 90% of the discussions, deep dives and emphasis in meetings was on Delivery and Costs. Even worse, I remember one organization that had 4 metrics, the first two based solely on stockholder value (yes, stockholder, not shareholder!) and the other two on cost. This was despite the fact that their everyday metrics emphasized Safety, Quality, Delivery and Cost in that order.
While such organizations can experience short term gains illustrated in their stock price, they are not sustainable and, in some cases, have led to tragic events.
So how do we fix it?
Focus on quality! Quality of product and Quality of process.
When your business is faced Quality, Cost or Delivery pressures, focus on Quality first. In over 15 years leading operations, logistics, or digital transformation teams I have yet to see a single instance where the root cause did not point to a quality of process issue or "abnormality".
As a business leader, it is your responsibility to drive your organization to fix quality first, whether product or process, to drive a true quality mindset in your organization. You will also see that other pressures you were experiencing in cost or delivery will be addressed. This is especially important if you are in an industry where bad quality is not an option, such as aerospace or medical fields.
By truly focusing on quality, spending most of your time, reviews and follow up on it, you will gradually build a quality organization that paves the way for long term sustained growth.
Quality first, the rest follows...
David Timmerman
The Foundation of Lean: