GA 198 | How to Start and Fund Your Lean Journey with Ron Pereira

If someone just beginning their lean journey asked your opinion of where they should start, what would you say? And what if this person was the CEO of their company and they wanted to know how they'd be able to pay the additional expenses of starting their own continuous improvement journey? How would you approach that question? Well, on today's show we're going to shed some light on both of these questions as we share the audio portion from two of our newest Gemba Talk videos. A show notes for this episode, which will include the actual videos, can be found over@gembapodcast.com just look for episode 198 and you can also check out Gemba Academy's Lean Learning System over@gembacademy.com with a fully functional trial. Now let's get to the show.

One of the most common questions we receive here at Gemba Academy goes something like this. We're ready to begin our Lean journey. Where should we start? My name is Ron Perera and in this first edition of our new Gemba Talk series, I'm going to share our take on this very question. Now, the answer depends on your unique situation, but here are three guidelines that can help you get started. First, know why before knowing where. Second, follow the money. And third, visualize the future. First, the near term answer to the question of where one should start depends on why you start. What problems are you trying to solve? To be sure our whys will vary, perhaps a good friend recommended it. Maybe it's being adopted as a strategic initiative linked to business goals. And of course, maybe you're doing it at the request of customers. Now, it must be said that when people are told what to do and how to do it without understanding or agreeing on why, they often resist. But when people know why action is necessary and agree that it's important, they'll often contribute great ideas on what to do and how to do it. Now let's talk about our second guideline. One of the factors to making a transformation successful is is to secure early wins. Which is what we mean when we say to follow the money, we should look for the so called low hanging fruit to experience the power of Lean. With this said, it's critical that these quick wins are measurable and real. For example, if a space saving is achieved, will the open space be rented out? Will the lease be canceled? Will it be sold? Can new profitable revenue be generated in that space? When finding the early win as a starting point, it's important to engage the cfo, financial controller or accounting expert to make sure savings aren't what some refer to as monopoly money, which never return financial benefit. Finally, our third guideline leads us to author and management guru Ken Blanchard's quote, knowing where you're going is the first step to get there. To truly practice continuous improvement, we need a North Star to keep us on track. This image should address the why and provide an accurate vision for many, the starting point for this visualization is not inside their four walls, but outside. A great starting point is a visit to a more advanced, lean thinking organization to help your team understand what can be achieved when while also developing your own vision of where you're going now. With this said, these visits shouldn't be focused on trying to simply copy every lean tool and process you see. In other words, instead of asking where you can buy the same yellow tape used to mark the aisleways, a better question would center on understanding why the company marks the walkways the way they do. Put another way, seek to understand why things are done the way they are now. In closing, I'd like to share what I believe to be the most important advice of this Gemba Talk video, and it's related to the popular lean tool called 5S. You see, I'm often asked which S is the hardest of the five to master? My answer is always the same. The hardest is to start. In other words, don't let perfect get in the way of better. One of the first questions business owners and executives executives deciding to invest and building a culture of continuous improvement have is simply how will we pay for this? On the one hand, when leaders clearly communicate that continuous improvement is a non optional part of every person's job, the cost of improving is built into the existing structure. However, when an organization is getting started or significantly ramping up its continuous improvement activity, then there are additional costs for training, hiring skilled personnel, and even setting time aside from daily work to make improvements. So just like anything that requires maintenance and upkeep, if you have no plan to pay for continuous improvement, you're planning to fail at it. That's why it's very reasonable to ask what results should I expect when it comes to your investment in continuous improvement? And there are several ways to answer this question. As a general rule, how much you can improve depends on where you are at the start. In other words, if you're operating with excess inventory, delivering to customers in weeks when the process takes hours, and spending a significant amount of time and resources on rework and overtime, it shouldn't be surprising that inventories can be reduced by 90%. Lead times can be slashed from weeks to days and costs can go down by double digits. By the way, I do want to mention that continuous improvement works for service providers and office based organizations just as well as it does for those that manufacture a product. Now, beyond the initial cost savings from making the conversion from traditional batch and queue delivery methods to one based on flow and pull, there are long term results and savings from from engaging everyone in daily continuous improvement. Even 50 years after starting on their improvement journey, Toyota was famous for targeting cost reductions of 1% per month and often achieving it. With all this said, it can be difficult to measure the benefit of having people aware, educated and engaged in improvement. Yes, there will be measurable improvements in safety, risk, quality, cost and delivery, but we'd argue the most powerful benefit will be building a more robust and competitive organization that will outperform and outlast competitors that don't adopt a similar strategy. So in the end, the question of how much does building a culture of continuous improvement cost may be more appropriately rephrased as how much money is it costing us more not to build such a culture?

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