lean and the corporate agenda with guest jacob stoller

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

Author & Speaker:

Karen Martin, President

The Karen Martin Group Inc.

@karenmartinopex

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Jacob Stoller President

Stoller Strategies www.JacobStoller.com

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Welcome to the land of corporate agendas, where things aren’t always as we’d like them to be!

4 © 2015 Jacob Stoller

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

© 2015 Jacob Stoller 5

© 2015 Jacob Stoller

• Define expectations. • Determine

compensation.

Corporate agendas matter because they…

And they must change for lean to go enterprise wide.

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Much of the agenda is about trying to control how outsiders will judge the organization.

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Money will always be an underlying issue in every corporate agenda.

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A few words about not-for-profits… Yes, this means you!

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Proper Financial Priorities

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1. Grow Margins (Profit)

2. Grow Top Line (Gross Sales)

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2011 2012 2013 2014

Gross SalesExpensesProfit

From The Karen Martin Group, Lean And Your Top & Bottom Lines

http://www.ksmartin.com/webinars/lean-and-your-top-bottom-lines


Improving the financial picture

Revenue Future Costs

Variable Costs

Fixed Costs

$ $ $ $

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It’s not just money – balanced scorecard approach

Vision & Strategy

Financial

Internal Business

Processes

Learning & Growth

Customer

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Executive measurement tools

Objectives Where are we going?

Key Performance Indicators (KPIs)

How do we measure success?

Targets How much is enough?

Initiatives How do we get there?

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Financial Objective: Reduce operating expenses

KPI: Material costs

Target: Reduce by 6%

Initiative: Get volume discounts

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Internal Business Processes Objective: Streamline accounting department

KPI: Days to close at month end

Target: Reduce from 12 to 10

Initiative: New accounting software

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Learning & Growth Objective: Improve morale

KPI: Employee satisfaction percentage

Target: Increase from 80% to 85%

Initiative: Employee newsletter, special events

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Customer Objective: Increase market share

KPI: Net promoter score

Target: Increase by 5 points

Initiative: Customer service training

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There’s some good news here…

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And some bad…

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The challenge is that a lot of non-lean thinking gets embedded in these measurements.

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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


1. 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. 22


2. Either / or thinking

Cost

Profitability

Quality

Market Share

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Roots of either / or thinking

Michael Porter’s competitive strategy matrix

Nature of Competitive Advantage

Broad Scope

Narrow Scope

Differentiation Low Cost

Focused Low Cost

Focused Differentiation

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Lean says…


We can improve these things simultaneously through continuous

improvement.

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3. Disrespect for gemba and people who work there


Innovate Produce Sell

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Lean says…


Production creates the value that people pay us

for.

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4. Segmentation of purpose


R & D Production Customer Service

Sales

KPIs ≠ KPIs ≠ KPIs ≠ KPIs

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Lean says…


We’re all in the value stream together.

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5. Blind faith in automation and technology

• Paving cow paths

• Locking in waste


Lean says…


Fix the process first!

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6. Using GAAP accounting to run the business


Shame and blame

Hold managers

accountable for variances

Compare projected

against actual

Manage to targets

Forecast and Set Targets

January February March April?

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Lean says…


What a waste of time!

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Changing the

Corporate Agenda

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Art Byrne’s 10-Year Transformation at Wiremold


Up 14 Times

Operating Income

Gross Profit

$30M to

$770M

38% to

53%

Valuation

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Art’s Value Stream Metrics

Metric (KPI) Calculation

Customer Service Percentage % of orders delivered on time

Productivity Sales / worker hours

Quality Reduction in defects over previous year

Inventory turns Cost of sales / average value of inventory

Visual control Measured by quality team


There’s no room for segmentation of purpose or either / or.

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Art vs. short term thinking

• “From 3 to 20?”

• The big leap of faith


Art vs. GAAP Accounting


Real numbers, simple format (Orry Fiume)

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Art didn’t manage the gemba, he managed in the gemba.

• Respect • Empowerment • Trust


“Your people are your only asset that appreciates.”

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The Healthcare Conundrum


Financial Pressures

Unacceptable Outcomes

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In healthcare, either / or spells disaster.


Defects cost lives… So do delays. Together they account for 30% - 40% of total healthcare spend.

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To solve healthcare’s thousands of problems, we need thousands

of problem solvers.


Segmentation of purpose is a show stopper, calling for a re-think of physician autonomy.

• Safety over authority • Work standards apply

to everybody


Northwest Center – Tom Everill


Adding social purpose to the corporate agenda

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“What I noticed in the corporate world is that nothing is impossible.”

The initial assumption


“Companies can either make profit or employ people with disabilities.”

? Profit Social Purpose

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Tom’s hypothesis

“Companies can both make profit and employ people with disabilities.”


The conclusion

“Companies can make higher profits because of their workers’ diverse abilities.”


Results…

• All divisions profitable. • Revenues up 500% in 3 years. • Tom hopes other employers

will “get it” and put him out of business.


Looking ahead… • Lots of lean activity

since 2008. • Lean slowly gaining

ground in business schools.

• Better dialogue between lean and non-lean worlds.


The tide may be turning on…

• Shareholder value • Accounting practices • Tolerance of waste • Hierarchical management


• Study lean as a management system. • Learn about business issues in your sector. • Join the broader conversation.


At the end of the day….


Lean has better answers!

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Jacob Stoller President

Stoller Strategies www.JacobStoller.com

http://amzn.to/1J75O1Z 54 © 2015 Jacob Stoller

http://www.jacobstoller.com/



Questions and Comments?


Karen Martin, President @karenmartinopex

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