007: Using the Lean Manufacturing Methodology to Create Smoother Company Processes

All right.

Hello and welcome to the Scaling Up Business podcast. Today we're talking about Lean, Lean, Lean process improvement and doing what you can to make your company a smoother running place. We're talking with fellow Gazelles coach and Lean expert, Nick Scott. Nick is in Canada today and most days. Right. Hi and welcome to the show.

Nick, thank you very much. Nice to be here.

Great. So, Nick, you're up there. You're a Gazelles coach, you're a Lean expert. We're going to talk all about that in a minute, but give us an idea how you got into this, what's your background and where have you applied this? Like that, Little.

All right, so I started working at Canadian Standards Association. That was quite a number of years ago and I was there for around 14 years. And of course, a lot of that got me introduced to concepts around process and systems development, ISO 9001 and so forth. And as I left CSA and started doing more work on my own as a consultant, I really started looking at elements of Lean and how to apply that with customers who are developing systems for their own companies and really started looking at the kind of the bigger picture approach of things. So any process improvement project really has to be sponsored from the very top of the organization. And that's really what brought me towards coaching and allowed me to kind of look at it from a little bit more holistic perspective, which I think gave me a much better perspective for my clients.

So you got into coaching in order to help your better implementation of Lean and ultimately to help the work that you do for businesses, is that right?

Exactly. I think the thing that worked for me with coaching is it gave me a perspective to say, what is the current situation within the organization that we can understand? Is process the actual piece that is what needs to be addressed, or is it more fundamentally a people problem or a cash flow problem? So once we could put those things sort of in order, if they were concerns, we could then look at it and say, if this is something we want to do, how can we get focus within the leadership team and how can we make this a top priority within the organization to say, amongst all the other things that we have to do in day to day business, how do we put a focus on developing the processes and improving the systems so that everybody's aligned and moving in the right direction?

Well, it's interesting you talk about, is it a people problem? Is it a process problem? Yesterday I was meeting with a group of CEOs from our clients. So I have a couple occasions where I Bring multiple clients together in one month to engage beyond the team sessions that we do. Yesterday we got on the subject of people, and a lot of them were dealing with people issues. Right now, what I realize so often is that all of these things are connected. So yesterday's people problem were going to be solved with processes around, specifically around recruiting and developing people, and that they were missing that as a key process and everything was ad hoc.

That's actually a very interesting point. I mean, this idea of connectedness or kind of embracing complexity to a certain degree within organizations, you know, good process to hire the right people, gets the right people in place, which in a lot of ways means that, you know, you've got the people in place to run the business much more effectively. I was having a discussion with a fellow HR consultant and we were kind of talking about this idea. I don't know if you're familiar with the book the E. Myth Revisited.

Yeah, absolutely.

And he very much talks on process, and his idea is you develop a process and define it clearly enough that a skilled individual in that particular area would be able to implement the processes as they are. What we were talking about is that a real good way of thinking about that connection is if you have good people and good processes, you have some overlap there so that the people fill in any little concerns that you might have with the process and build it continuously developing it. Whereas the process that's well developed helps really good people perform at their maximum capability.

I just want to remind folks, we're talking to Canadian, and I know that our. We have listeners and folks on our email list around the world, but the vast majority are here in the United States. And in the United States, their ears prick when they hear the word process, the pronunciation process. And I want to underscore, you're really talking about the same thing with a little different pronunciation. It's nothing different about the way they do things, really, in Canada, at least in this area.

Right, Absolutely.

So let's talk about terms and definitions for a minute, because I think it's useful to get started to distinguish and identify things. So we hear lean, we hear six sigma, we hear ISO 9001. What are all these things and how do they relate to each other?

Well, really, they're all just kind of different methodologies, and there's a lot of overlap in the methodologies. And one of the things that's very key that you'll find that comes up over and over again is that any process improvements, and I hate the term sort of project, because really we want to get process improvement to a point where it's ongoing within the organization, but you have to start someplace. But any process improvement initiative or project has to have a very strong support from the top of the organization. There has to be an understanding that why this is important and it's not just about trying to improve the quality or the consistency. It's all across the organization in how everything gets done. So we often think of process in terms of like a production of a product or a delivery of a service, when in reality it applies to both internal, external parts of the organization. So the other thing that's always in common with these is that you have to also be able to draw information from the people that are on the front lines of the organization that are doing the actual work. So process should never be a top down sort of, here's how you do it and understanding, you know, if you can kind of get those two pieces that support from the top and the involvement of the people that are doing the actual work now you've got a chance for things to work successfully. So really just to be very, you know, sort of straightforward about it is, you know, if we wanted to talk and just say, and I like the term just processes as from a generic perspective. And really all a process is, is you've got some inputs, something happens and there's an output.

Yeah.

So that in itself is very straightforward. So other Systems, and probably three of the most common are ISO9001, Lean and Six Sigma.

Yeah.

So ISO 9001 is really just a methodology that gives you sort of the basic requirements for developing a company wide process. Company wide processes. And it became popular because it was a way for organizations to say, okay, if you're a supplier of mine and you have an ISO9001 certification, then I understand that you're doing things in a reasonably consistent manner. So Lean, which is based on the Toyota production system and is in my mind kind of that, that next step. So where you've kind of got some basic processes, Lean just helps you understand the concepts in getting rid of waste. So what can you do that kind of expands that concept to say we're not just talking about building a process for consistency, but we're talking about really improving the overall how an organization operates by thinking in terms of what is not providing value to a customer and can we eliminate it or at least mitigate it as much as possible? Six Sigma really starts looking at those elements of how can I completely reduce scrap? So things that we develop during a production run that we want to get rid of. So it starts looking at these ideas of how can we remove any sort of mistakes from within the system. And was originally started in Motorola for production of microchips and so forth. But of course as people have found benefits to it. And each of these, if you look at or delve into some of this stuff has their own terminology behind it and has their own ideas. But ultimately every organization in the sense that every organization is composed of different people. And even organizations that are doing exactly the same thing or delivering exactly the same service do it in a different manner. One of the common mistakes is somebody just trying to photocopy. This is what organization A is doing. And as organization B we're going to do it exactly the same way. And it never really works effectively that way. Processes need to be something that are developed almost organically within the organization with this real commitment to continuous improvement.

Well, I like to simplify things and I like to simplify the way we teach things. For many ways the terminology Lean and that served as a way even to simplify that. So it was easier to comprehend then as you laid out the Differences between the ISO 9001 and the six sigma and far less intimidating. Oh Lean. Well, I get that. Cut out the fat.

Exactly. And that's it. A lot of the documentation or books can be are that are out there are written by people who've studied the processes and it can be very difficult from an implementation standpoint. I'm a really big fan of the book the two Second Lean for anybody that whether they're really experienced in Lean or just want to get started. Because conceptually I think he really boils it down to the real meat of the thing which is really developing a passion for continuous improvement.

Well, I think that's a good example. So Paul Akers came and spoke at one of our summits on Lean and he has a terrific assortment of videos that he's continually creating that just make it really real in a lot of different ways from whether it's his desk or how he flows his day or his aircraft or how they handle orders. I mean just endless videos on all these things that he's habitually shooting make for very entertaining. I've used them both in workshops and with clients to introduce some of the ideas in motion or send them along as follow ups people. So I love that and I love his notion. But he also underscores something that you said earlier that if you don't have buy in from the top then it's going to be really hard to get lean done within the company. And you can see that as the owner of the business, he's a full on lean geek and he's made himself that over time. I think a lot of entrepreneurs and business owners can kind of find what aspect of it or figure out how they connect to that because there's an aspect of creativity and creation that is common.

And actually you make a very good point there is that a lot of times people hear the word process and whenever I talk to a group about it, I'll ask people what comes to mind when I use the term process. And a lot of times people come up with ideas around, you know, just kind of, you know, repetitive or boring or, you know, and the reason I have that conversation is because I think it's, it's. Those are valid experiences that they've had in one form or another and how they've been introduced to this idea of process. And a lot of times, you know, people have been fed a process from the top down and it's actually made their jobs more difficult. And it always, always makes me cringe a little bit when I see, you know, somebody basically telling a person who is on the front line this is how you should be doing your job. Ultimately it's, there's a little bit of, there's definitely an element of humility in there, whereas an understanding of even if I'm just, you know, one level up, I don't have that same capability necessarily to understand what it is that an individual is doing right there in the certain, you know, day to day difficulties and challenges that they face in their particular job. So being able to kind of this is that sort of when you start looking at the holistics of it with larger organizations developing that trust, there's a whole element of the people side in this, that. And I think Paul Akers covers this really quite well in his book about being able to bring everybody in the organization and the time that he spends walking them around each day to learn what other people are doing is, is kind of what builds that creativity, right? You just walk up to somebody and say, hey, give me some ideas for how to improve what you're doing. And they kind of shrug their shoulders and say, I don't know. And that's not a sign that they don't necessarily have ideas. It's just, you know, you're just out of nowhere, you're coming up and asking them a question. What's very interesting actually is that in a client that I worked with, they were implementing Lean and they did a really good job of Getting the training out to everybody. And they started off in this idea that the trouble that they were going to have is that the management understood what it was that they wanted, but they were going to have a lot of trouble convincing the people on the floor. And this was an engine remanufacturing company. What was very interesting is I worked with just a small group as part of a sort of a pilot project. And the staff on the floor actually really kind of understood it and really bought into it. They cleaned up their workspaces. They really liked the idea of just having the tools that they needed available. It made them more efficient. But at the next level, there's that bigger piece of the single piece flow. And what was happening is that within different reasons, within politics, within the organization, even things like the way compensation was done, it actually prevented the organization from implementing the sort of flow that they wanted. And that's where that next level up then has to be able to say, okay, we understand this is what's happening here. Now we need to get that understanding of how we move that into the next phase. So with larger organizations, it can be a real challenge when you have the interactions between groups that are somewhat siloed from each other in the current organizational structure. So those pieces need to be broken down. And this is why I say that you start with this idea of saying, okay, we want to improve the organization. And if we set some sort of artificial time limit, like we're going to have all of our processes and everything documented and running perfectly in a year, you're somewhat doomed to fail because you'll never get perfection in a year. And I would tell people, start with something like, we have draft processes established in several areas. Start with a pilot project, do some pieces, and then take that next step. And understand that this is an ongoing investment in the organization. And at each step, at each bit that we invest in it, we're actually building the value of the organization as well as reaping immediate benefits from ongoing efficiency improvement, better staff engagement. People are definitely happier when they're able to develop their own, have an effect on how the work is being done and implement their own ideas and feel like they're actually part of, not just the person doing the work, but the person contributing to improving how that work's done.

So give us an idea then, or tell us about a place that you implemented this, where you really liked how it turned out, or that illustrates this at work.

So a really good example was a company that we did a pilot project with that provides basically a municipal Service where they provide. Somebody needs a permit to do, say, an electrical upgrade in a house or they want an electoral permit, basically. And then there's an inspection process after that. And so municipal service is providing the inspectors, training the inspectors and helping them all do the work. So we came into this, and we're not coming at this from this specific sort of idea that we're implementing lean. We're just coming in and we're doing this and saying. We're talking to the staff and saying, you know, process exists within the organization and we would like to help improve them. And it's really just about building in this continuous improvement. So as a pilot project, we engaged. We had full support from the top of the organization. They provided an internal person that their job was to basically be the coordinator of these groups and be the person in house who was going to be able to help them. And then I came in as an external consultant to basically provide the knowledge and sort of ongoing coaching to help them as they develop their processes.

So what sort of company is this? What did you do?

We call. It's a safety codes council. And so they basically provide the inspectors for doing electrical inspections, plumbing inspections, and that entails a whole bunch of things in the sense of how they train the inspectors, how the inspectors are registered, how the ongoing training material is developed. So there's a whole.

Got it, got it, got it. I'm with you now. Yeah.

So we went and we picked a few groups that were interested in doing this, and we went through and said, okay, let's develop a basic flowchart and understand how you are doing the specific work. And again, going right to the front line and saying they had somebody that, say, taking payments, let's talk that person about doing payments, how that actually happens. A lot of times you find that there's points of friction, say, when you move information from one person to another or one department to another, and those are often opportunities for improvement. So we just smoothed things out and said, okay, you know, they were able to identify areas where. Why are we kind of going in this loop here? Maybe we could just, you know, have this one person do this, basically. And so we mapped out the way things were at that point. And then I had them go and just basically do a few time measurements to sort of say, well, how well are things flowing? Yeah, and they did that. And then we did that before, and then they made some changes to it. They did some measurements afterwards. They were able to give, you know, identifiable. Yes, this is improved by a measurable amount.

Yes.

And Then what was really good is then the staff themselves were so, you know, interested and so enjoyed this ability to sort of step out of their typical role that they were doing and make their lives easier. As Paul Akers mentions. You know, whenever you have this thing that it's kind of a pain, that's often, you know, a good sign there's an opportunity for improvement, improvement. So you're taking away those pain and frustration points and making the job itself more enjoyable. And when they presented the information to the executive team and they basically said, like, here's what we've done. We did this mapping, we did the processes, we thought it was fantastic and it really helped us get a better understanding of what was being done and how it could be improved. And we've made our systems more efficient and we've reduced our incidences of problems and we just thought it was wonderful. And, you know, and then management was able to say, well, fantastic, that was a great pilot project. So this year we're, you know, kind of continuing that process on bringing in some new, some new groups and they're able to learn from the experience of those that have done it in the past. And again, this is something that is an ongoing process. So they're setting it up from the perspective of this is not a once and done sort of thing. This is a, you know, we have to develop the foundation, but after that we're building in this kind of core ongoing improvement. And they're not just doing this for the service delivery, but they're also doing it for their internal processes, for how they do their budgeting, how they do their planning, how they do their hr.

So were you able to quantify the value of the work that you did? Did it save money, save time?

Yeah, I mean, I don't have the number right in front of me, but I mean, for that piece that we did, they probably had. I'm trying to think there's one in particular where they were able to get a 20% reduction in the time that it was taking to do the work. So what's great there, of course, is that not only are you doing and completing something faster, which results in better. The customer's happier turnaround is quicker, the staff are happier because they don't have to deal with some things that were a pain. And so even within that sort of saved time, there's a whole element of positive consequences. When you talk about this interconnectedness that are difficult to quantify in a lot of ways, but you see them happening and you see the overall improvement in Staff morale.

Let me ask you about this. Maybe this is an aside, or maybe I see this all the time, but one of the things I noticed going around in different companies is that many people are just really comfortable the way things are. Yet if you look from the outside, from another industry, from another business, you're like, why in the heck would they do that? Like that. Sometimes there's a really good reason within the industry that's less apparent. Other times there's an opportunity for advantage. I remember when I took over one company and I discovered there was one person whose entire job was to label and relabel products. They had a really good reason for it. They said, well, we have to have things. So different customers have different labeling requirements, and then different marketing activities, sales and trade shows and events have different marketing requirements. So we had one person in that business that just. That was their whole job, right? Labeling, relabeling things. And I came in and I was like, oh, my God, this just seems so stupid. Why would you do this? Why can't we come up with one label that works for every situation and then maybe get some others to compromise and so on? So we just questioned the very assumption of the entire process that was at work there. So there was a person, there were systems, there was software, and we got rid of all of it. And that person didn't lose their job. The person got redeployed into other more interesting activities. And they were just doing it because nobody had stopped to question the whole thing. I just wonder how often people are able to see that now. That then led to new process of different labeling methods, and there were operational implications for the movement of goods around the business and so on, equipment and software that needed to be changed. But it was a huge net savings for the thing in time, money, and just an impediment. So forgetting the cost of the person and those activities, but the time that they needed to prepare for a particular event, a marketing activity, a different customer set, anything like that, the speed up of everything, which of course let them get a faster return on their inventory. So it's a long story, right? It's my own story. But then my question to you is, how do you get people to see what they've taken for granted?

I think that really comes down to this philosophy of there's always a better way of doing it. And it's a great example because I've seen this in so many situations where it's just accepted right there is, this is how we do it. So, yeah, it's really what Happens is a problem occurs and we say, okay, well let's, let's solve it as quickly as possible without understanding the root cause of it. And then we implement something and then that becomes the permanent solution. And this is how bloat happens in organizations is, you know, it's like that idea of, you know, writing software, and the software just keeps bigger and bigger as everybody writes. You know, instead of trying to find a flaw in the software, you just write code around it. Things just kind of grow from that perspective. And ultimately, and this is a real problem now in Alberta, there's a big segment of our economy that runs from the oil patch. And when things are good, the money's available to just simply say, forget it, let's just do it, whatever works, right? We have no time to sit down and think about better solutions. And there's another lean expert in the area, and he calls it the Alberta disease, or maybe it'd be better called just like the resource economy disease, where then when the price of the commodity drops, you've got all these organizations that cannot compete in a bigger market. So they're inherently inefficient because they had access to all of this capital that allowed them to just add on people to do relabeling, for example. If we could get people to look at that from a more holistic perspective and say, what's the root cause of this problem? How can we understand, in a sense that we're always looking for ways to reduce the amount of work? If I said, what's the value to the customer of putting a label on it, peeling it off and adding another label, or printing different labels for every different type of product, there's zero value to the customer in doing that. Now, there may be some legitimate reasons why you have to, from a product tracking perspective or even a compliance perspective, but what can we do to just minimize how much time that takes so that we don't have to go through this frustrating process? And that doesn't just happen necessarily. Kind of one of. That's just one process of. I'm going to bet there's probably hundreds of them within that organization that exist. So tackling one doesn't really solve the problem entirely. And it really, you know, even looking at it, saying, well, that might not even be their biggest bottleneck, right? They may have an even bigger. The theory of constraints kind of comes in here where you look at it and say, you know, what's our biggest limitation right now? And that's the one we should focus on immediately. But if you imagine Having an organization all over the organization, everybody's looking to remove constraints. And you know, there's this saying that sometimes you need to slow down to go faster. And I think this is very applicable to Lean. And Paul Akers is a great example of that. Where I think he says his morning meetings with staff, where they go around and see what the changes have been made, is something like an hour and a half. And most production organizations say that's insane. I mean, you would give up an hour and a half of production a day. And his rebuttal to that, of course, is something we can get done in three days, what the average company can get done in a week. Because we've invested all of this time and effort into not just for our own process, but, but in understanding and developing a culture of continuous improvement throughout the organization. So it's this ongoing investment that bears amazing dividends. That what's, what I think is, is something that is difficult for, you know, the human brain to kind of wrap itself around is we always want a silver bullet, right? We want something that's going to be, that's going to be the, the fix all to the problems and process. And Lean is kind of the opposite of that. It's kind of looking at it and saying, well, there's lots of little problems all over the place. And instead of trying to look for that one silver bullet or that IT system that we can put in place or the next big thing that we can try and implement that we just simply say, how do we just in a very non exciting, just very basic way say let's just try and make things a little bit better each time?

Well, I think you underscore something great there and that's that when you come in, when an expert or an outsider consultant or somebody else comes in, there's a change in the organization. You may see some beginnings, but then the task is to make it cultural and part of the whole organization and not just focus on fixing one thing, but creating this process of continuous lean improvement over time, part of the way the company operates and continue to seek that. So we mentioned Paul akers in the 2 second lean. We mentioned a variety of things. We've got your web address. Are there any other things that you'd like to point our listeners to that we could add to the show notes?

I think a really great book to just get some starting points is the Checklist Manifesto.

Oh yeah, I love that.

Yeah, I actually understood the Summer of it for some time, but it's been a while since I've Sat down and read it, and I went through it again, and I just really. It just really speaks to me in a sense of this doesn't have to be overly complicated, and it doesn't have to be, you know, it doesn't have to speak to, you know, oh, I, you know, I got to write this like, you know, somebody's an idiot. No, you. You gotta do it to match the capabilities of the individuals that are doing the work. And I think one of the things, though, that really kind of I enjoyed about his kind of summation of the book where he's talking about how, again, this. This idea of a checklist, it's very, you know, there's nothing exciting about it. It's. It's very. In a lot of ways, people almost shy away from it because it is so inexpensive. It almost seems like too good to be true. You mean for such a low price of almost nothing, I can have such a positive improvement?

Yeah. Well, you wouldn't want to fly in a plane where the pilot didn't use a checklist. Exactly. Or they didn't apply a checklist. And increasingly, surgeons are using checklists to make sure they don't leave anything behind.

Absolutely.

Or cut off the wrong limb.

And really, when you think about it, when you're hiring somebody, the last thing you would want to do is miss some of those critical points. And a simple checklist could make that much easier.

Make sure that you learn from the last thing. Update your checklist. So we have checklists for onboarding new clients. We have checklists for monthly and quarterly client sessions. We have checklists for our workshops. We have checklists for. For virtually every part of the business. And we just keep tweaking them to ask, do we need to add something to that checklist? So love it, love it, love it. All right, well, we've been talking to Nick Scott on Lean and how to make little improvements every day to transform your business. Nick, it's been a real pleasure. Will I see you in Atlanta soon?

You will. I will be there.

Awesome. Well, thanks for being on the show.

Well, thank you very much for having me.

Yeah, it's a real pleasure. Thanks for sharing your stuff with us. As if anyone hears and would like to engage. Nick, we're also happy to connect you. If we are going deeper on Lean with any of our clients, we would bring Nick in as a subject matter expert on Lean. So we think highly of your work. Thanks for being with us.

Thank you.

Sa.