Culture, Productivity, Kaizen, Lean, Business Improvement

All the above are current buzz words, especially productivity.  No matter which of these areas we focus on, I think we would agree that leadership is of utmost importance.

When talking about the above we mention empowering individuals, and allowing for innovation from within.  But how can we achieve this without effective leadership, and a culture that thrives on the excitement of being involved in creating a better department, company or economy.

The Australian prime minister’s task force came up with a report on manufacturing entitled “Smarter Manufacturing for a Smarter Australia”. (http://www.innovation.gov.au/Industry/Manufacturing/Taskforce/Documents/SmarterManufacturing.pdf)

While looking at the challenges that face the manufacturing sector, the report also focuses on the opportunities that this creates.  It discusses the importance of manufacturing to Australia, the economy and most importantly our people, you, me and our children.

One comment in the report, also made directly to the Prime Minister, Ministers Combet and Shorten was: “We are particularly concerned that leadership and judgement is brought to bear on the ‘perceptions issue’ about Australian manufacturing.”

Again we are talking about leadership and judgement, but the report further outlines the importance of broad-based Australian economy, built on competitiveness, productivity and innovation.

Figure 1.1 below highlights the importance of policy in achieving the above objective through a strong direction created by a solid strategy.  The total report spans over 117 pages and contains detailed data on the manufacturing industry.  I would recommend that you have a good read of it, if you are interested in the future of our country.

Figure 1.1 SMARTER MANUFACTURING FOR A SMARTER AUSTRALIA – POLICY FRAMEWORK

The bottom line however is that while policies can be set, strategies discussed, and recommendations presented, it is up to the individual’s leading the businesses within the sector, as well as the ones supplying the sector, and finally the consumers to ensure the path is sustainable.  Associations and industry councils, advisory boards, the education sector and we as individuals also play an important part.  We all have a hand in shaping the future of this country, as insignificant as it may seem.

At the end of the day, it will be the voice of many that will create a better future.  I think none of us can be under the illusion that it will be easy.  We must accept that severe changes will be required about how and where we do business.  And the “pessimists” must stop the negativity and winching, and should focus on the opportunities that are presented to us.  The faster this happens, the sooner we will move on.

Change can be exciting, although scary at times, and it will mean entering a zone that we are not comfortable with.  But if we are big enough to accept that there are other options, and that we need to open our eyes, we will be able to see the light at the end of the tunnel.

There are many tools that will help us achieve better productivity, leaders, culture and so on.  Not all will work for everyone, but they will allow individuals at the front line to help pave our way to the future.  Together with the right leaders these individuals will create companies that are efficient and sustainable.  There are already many programs available to businesses that will support change financially.  These could be initiatives to support sustainable practices, reduce environmental impacts, or purely arm individuals with the skills required to affect the necessary changes within industry.

For more information on initiatives, leadership, or any other comments, please contact me at Chase Performance on 1300 880 338.  I am located in Melbourne, but regularly visit our offices in Adelaide, Perth, Brisbane and Sydney, and am always happy to have a chat and discuss any of the items above in person over an Espresso.

Best regards

Roland Weber

Chase Performance - Lean Six Sigma - New Web Site

Chase Performance is pleased to announce it's new web site with many lean six sigma case studies and more...  http://www.chaseperformance.com

Lean Mining, Integration of Lean, Six Sigma & TOC Improves Performance

Lean Construction and Mining are on the forefront of our programs.  We are currently working with clients in Western Australia through our Perth branch, Queensland through our Brisbane branch and South Australia through our Adelaide branch, to create improvements in all areas of the construction and mining operations.  The article below, although published over two years ago is a great example on how easy it is to create improvements.  

Most mining companies have their own continuous improvement specialists who we work closely with.  The advantage we offer is access to more resources due to government assisted initiatives, as well as nationally recognised qualifications for the individuals completing the programs.  

We also assist in rolling out lean processes in departments like admin, procurement and planning, that are often located in head offices and not necessarily included in the programs run on site.  Contact us for a chat, to see how we can add value to your lean journey (1300 880 338).  Here's a link to a lean article I published a little while ago...  http://leanimprovement.blogspot.com.au/2012/04/lean-mining.html

Integration of Lean, Six Sigma & TOC (theory of constraints) Improves Performance

Right combination bring results in Brazilian mining and metallurgical plants

Apr. 9, 2010Reza M. Pirasteh, iTLS-ISO Group and Eng. Celso G. Calia, Goldratt Associados

It is clear that for-profit enterprises manufacturing products strive to achieve their targeted revenues from their production reliably utilizing their available capacities and resources. Unreliable and below target production levels lead to low revenues and high inventories, causing high operating expenses. As an outcome, profit and ROI are typically compromised. This situation also creates an enormous amount of stress and frustration on the organization's critical resources potentially jeopardizing the future revenue opportunities.

Continuous Process Improvement (CPI) approaches such as Lean, Six Sigma and TOC have been applied to help organizations to improve their efficiencies and profitability. However, there had not been research to quantify the effects and contributions of each of these approaches which led to a recent scientific research conducted from 2003 to 2005. This research also tested effects of a integrated approach applying the three methodology in a logical sequence and compared its effect with the implementations that were using each one of the CPI methods alone.

The integrated continuous process improvement tested in the research is called iTLS. It applies the Theory Of Constraint, introduced by Eli Goldratt, Lean which is best known as Toyota Production Systems (TPS), and Six Sigma developed by Motorola, in a sequence in order to optimize each approach's core strength.

Taking over two and a half years and involving 21 manufacturing plants with 211 CPI team leaders implementing their preferred CPI approaches,105 projects were completed.

The research also quantified the financial contributions realized through implementation of each one of these CPI approaches. The statistical analysis of the results indicated that Lean and Six Sigma contributed significant financial results for their organizations. Both Lean and Six Sigma contributed similar results (P-Value of 0.622, did not indicate significant difference between the two approaches, considering financial benefits factor.) However, the integrated approach, applying TOC, Lean and Six Sigma in logical sequence, resulted in financial benefits that were over 4 times (4X) higher (P-Value of 0.0000, indication of high degree of significance), if either one of these methodologies were applied alone. (For research click here.)

One company that used the integrated approach is Votorantim, which is the 4th largest private Brazilian group and operates in several countries in various market segments, such as mining, metal industries, cement, paper, steel, and fruit juices. Five facilities have adopted and benefitted from the Integrated TOC, Lean, Six Sigma, iTLS approach for continuous improvement developed by Dr. Reza Pirasteh, introduced publicly in 2006 (Pirasteh & Farah 2006), in a deployable form. Two of the plants in this case study were mining operations and three were metallurgical plants.

In this case study the iTLS approach successfully synchronized production with the available capacity levels while providing process stability. This approach was smoothly implemented through involvement and participation of the organizations' people and their powerful commitment for success.

The Integrated TOC, Lean, Six Sigma Model

iTLS integrates, synchronizes and harmonizes the three powerful ingredients (Lean, Six Sigma and TOC):

• Focus on the few yet critical elements that limit the global performance of the organization by applying Theory of Constraint tools
• Eliminates waste in the form of "hidden factories" with application of Lean tools
• Reduces undesirable variability to ensure process stability with Six Sigma tools

The application of this integrated system to production for continuous process environments ensured that the invested capacities and resources were converted into stable production flow generating profitable revenues.

Results

The case study that follows is a summary of application of iTLS in a number of Brazilian conglomerates includes mining plants, ore concentrating plants, and metallurgical production plants. In all cases studied, when the iTLS was applied, within 3 to 4 months production throughputs significantly increased. Continuing with the implementation with additional 3 to 4 months the processes stabilized while achieving the desired strategic target production levels. This was previously perceived as impossible.

The new performance levels are significantly exceeding previous production thresholds without adding and investing in additional capacity. Consequences were simply generation of more revenues, more profits and higher ROI.

Case Study

Initial Condition

• All plants were unable to meet production targets and had sporadic production performances, leading to lost revenues, due to missing deliveries.
• There was a constant pressure on the plant managers for not being able to achieve the desired strategic production results which trickled down to all levels below in the organization. The other undesired effects observed were:
• Targets were not met
• Huge quantity of actions for problems solving which were becoming more unmanageable as the quantity of the grew
• Growing pressure for acquiring more and more resources
• People were frustrated. Their perception was: "the more we do, the less we achieve"
• "Finger pointing" and "It was not me!", "I am not part of the problem" was a commonplace, creating an environment of non-cooperation and covering the back atmosphere
• The productive utilization of resources were low
• Lack of consistent preventive maintenance
• Employee apathy

Application

The iTLS model was implemented in all plants simultaneously. The model was applied to bring stable and robust process flows to the market place consisting of the following basic elements:

• A Drum that set the production pull tempo, established the delivery TAKT (at the pace that an operation needs to operate in order to meet the customer requirements) for the plant's product flow to the market
• Established buffers (Kanbans) that responded to the process drum and protects the vulnerable processes and the shipments from natural process variability
• A Pull material release disciplines synchronized with the pace of the Drum
• Implementation of Lean tools to identify sources of waste and removing them from the processes, making processes more effective
• Application of Six Sigma tools to make improvements sustainable by bringing process performances under statistical control
• Establish a repeatable and pragmatic problem solving framework for the workers and management to be able to continuously improve their processes autonomously

There is a direct correlation between responses to the operations' drum and process stability and the amount of financial gains achieved. Once the process drum was identified based on the optimal capability of the constraint resource, the operations drum became the pace for the material release and the shipments.

The constraint operations needed to be protected against variability caused by the feeding and interdependent operations, in order to ensure that full capacity was being converted to the product. In operations with continuous process environments, protecting the constraint which sets the operation drum and shipments was accomplished by creating sized protective buffers feeding them to ensure continuous flow of throughput to the market place.

Once adequately sized and implemented, buffers absorbed the process random variability shocks on the constraint resource and the shipments. It was important to note that the impact of the variability was buffer loss of volume or level, which needed to somehow recuperate. This was possible by utilizing the excess capacities at the feeding operations acting as virtual protective capacity. This allowed them to work when needed, at a pace which was higher (~10%) than the constraint or drum and the shipment's pace to replenish used buffers.

Therefore, any operation with capacity below 110% of the capacity of the drum, was tagged as a constraint, because it could potentially have a global adverse effect and jeopardize the throughput. It may seem that the operation becomes temporarilyunbalanced. Then the work teams began working on these operations, in terms of getting more from what they have by reducing waste and stabilizing them by reducing variability by applying lean and Six Sigma tools.

This model used buffer management to optimize decisions making based on interpreting the behaviour of the Buffers over-time. Buffers became the story tellers by letting the operations management know what is going on in the entire flow and allow them to anticipate potential disruptions, identify causes and derive actions for our Continuous Process Improvement (CPI), using Statistical Process Control tools.

The repeatability of results achieved with iTLS implementations was consistent with expectations. The following were some of the results achieved through implementation of this approach in all plants:

• Production improved by 10% to meet 100% customer requirement, without any additional capital investments
• Profits increased by additional 5%
• Pay-back periods were only a few months at each plants and sometimes less as low as 28 days
• Process stability improved exceeding the strategic target level expectations

Eugenio Hermont, General Manager of Votorantim Metais Unidade Tres Marias states that "...we have succeeded in another great achievement... that is why Tres Marias achieving all targets...."

Synergetic application of integrated TOC, Lean and Six Sigma, iTLS, provided a rapid and effective approach to improve capacity and productivity in metallurgical mining plants, which significantly improved the operations profitability and meeting 100% customer commitments. This model applied TOC to focus where to make necessary changes, Lean was applied to remove waste and Six Sigma tools were applied to control process performance and variability.

Reza M. Pirasteh, PhD., MBB, CLM is founder of iTLS-ISO Group. http://itls-iso.com/itlsgroups@itls-iso.com Eng. Celso G. Calia is founder and partner of Goldratt Associadoshttp://www.goldratt.com.br/site

7 ways lean healthcare management reduces cost

July 24, 2012 | Steff Deschenes, New Media Producer

Article by: Steff Deschenes

New Media Producer for Healthcare Finance News

Follow Steff on Twitter@Steff_HFN

With the financial pressures that healthcare organizations are facing, many hospitals are using traditional cost cutting methods to save money by looking at layoffs and staff reductions. Many more hospitals, however, are finding ways to reduce costs through lean management methods that don't require layoffs and can improve quality for patients.

"Lean is actually the best alternative to layoffs. It's all about encouraging everyone to participate in process improvement, as well as finding creative and interesting ways to save money for a healthcare organization to avoid those unwanted traditional cost slashing endeavors like layoffs," explains Mark Graban, a lean expert and author of the book Hospital Kaizen. "Layoffs don't lead to long-term cost reduction. And if you lay off people and don't fix any processes, you're risking patient safety and quality. As a result, more and more healthcare providers are looking at lean to break that cycle."

[See also: Reducing cost through clinical redesign]

Graban has outlined seven different ways that lean management can help reduce system cost.

1. Reduce "never events." A "never event" includes falls, infections, erroneous amputations and other small-to-large-scale disasters. Reducing these events is, of course, best for patients, but there's also financial pressure to reduce never events. In 2009, Medicare stopped paying for care from events they consider preventable, and now private insurers are following suit. Pressure ulcers and bedsores, for example, are viewed as preventable. They shouldn't happen if a good process is followed – like patients being repositioned. Improving quality in general saves hospitals more than layoffs since "never events" occur when an understaffed hospital can't be attentive enough to a patient needs.

2. Supply chain improvements. It's important to consider looking at a more effective material restocking process. For example, more frequent smaller batch deliveries or rotating supplies more quickly reduces  both the amount of space used in internal warehouse and cash tied-up in inventory.

[See also: Cost structure for hospital tracking systems must be 'no-brainer']

3. Delay or cancel construction and expansion. A trend in the last few years has shown that hospitals use lean to increase capacity by using current equipment and available space. Lean makes better use of existing resources as an alternative to increasing capital spending. "I worked with one hospital that through process improvement to patient flow – preventing delays from registration through to discharge – they increased the utilization rates of their MRI machines from 40 percent to 60 percent. And they didn't need buy more equipment," said Graban.

4.  Reduce overtime. Reducing overtime is a great opportunity to help make improvements with lean that doesn't alienate people the way layoffs do. Essentially, people want to get home to have dinner with their families in a predictable/consistent way. If you can improve charting during the process, for example, instead of having nurses do it after, you can improve staff satisfaction while trimming down overtime, which results in both morale and cost savings. It's a win-win opportunity.

5. Reduce length of stay. This certainly isn't about pushing patients home before they're ready, Graban notes. Reducing length of stay is done through preventing errors that would extend a stay or delay a discharge when patients are medically ready to go home. Because of miscommunication, poor planning, or when families or nursing homes aren't yet ready to take on the person being discharged, a four-day stay can suddenly turn into a five- or six-day stay. These process related things aren't medical issues, but they often extend length of stay which can cost millions.

6. Reduce unnecessary testing and diagnostics. A number of hospitals are trying to be responsible stewards of healthcare dollars by reducing inappropriate usage of lab testing and diagnostic imaging. For example, through medical evidence it's been shown that when a patient comes in with back pain more often than not what they need is physical therapy – not a fast pass to a CT scan, says Graban. ACOs help organizations benefit from their own cost reduction efforts and will do so in a way that doesn't shortchange what the patient needs.

7. Reduce delays and errors in billing. There are a tremendous amount of delays in billing, including too many people involved during different parts of the process. If there's a better flow, if people are handing off the work to the next person in the chain immediately, bills go out in a couple of days instead of a couple weeks. It's also incredibly important to make sure billing is being done properly. If mistakes are made and proper preauthorizations aren't followed, but procedures are done anyway, hospitals might be voluntarily giving away revenue.

This article was originally published on: http://www.isixsigma.com/share.php?site=http%3A%2F%2Fwww.healthcarefinancenews.com%2Fnews%2F7-ways-lean-healthcare-management-reduces-cost

To discuss how we can assist you with lean and six sigma in Australia, please contact Chase Performance on 1300 880 338 or visit our web site: www.chaseperformance.com

Losing our Marbles

This is the introduction to a book which a colleague of mine bought last week, going into detail on the often misunderstood, misinterpreted and/or misapplied field of lean six sigma.  I'm sure many of you can relate to this...

In the beginning there was the plan
And then came the assumptions
And the assumptions were without form
And the plan was completely without substance
And darkness was upon the faces of the workers
And they spake unto their marketing managers, saying "it is a pot of manure, and it stinketh"
And the marketing managers went unto the strategists and saith,
"It is a pile of dung, and none may abide the odor thereof"
And the strategists went unto the business managers and saith,
"It is a container of excrement, and it is very strong and such that none may abide by it"
And the business managers went unto the director and saith,
"It is a vessel of fertilizer, and none may abide by its strength"
And the director went unto the vice president and saith,
"It contains that which aids plant growth and it is very strong"
And the vice president went unto the senior vice president and saith,
"It promoteth growth, and it is powerful"
And the senior vice president went unto the president and saith,
"This powerful new plan will actively promote growth and efficiency of the company and the business in general"
And the president looked upon the plan and saw that it was good
And the plan became policy.

"The plan" - (David H. H. Diamond)
from the book "The Heretic's Guide To Best Practice" - The Reality Of Managing Complex Problems In Organisations

by Paul Culmsee & Kailash Awati

Although I haven't read the book yet myself, I will endeavour to do so soon.  It is meant to be some light reading with a good sense of humour as I understand.  Chase Performance understand the difference between words and action, and the results and outcomes from our programs with our clients speak for themselves.  For more information on lean six sigma programs for your whole organisation please visit our web site: www.chaseperformance.com or contact us on 1300 880 338.  With locations in Melbourne, Adelaide, Perth, Brisbane & Sydney, we are a truly national provider that can support your business and help you implement systems and processes by giving you access to our specialists and resources.

5 Ways Process Is Killing Your Productivity

Yes, Process Improvement is what we promote, but within reason and the guidelines of a lean business.  Below is an article that shows how taking things out of context or trying to put your own spin on it, can actually be detrimental to a business.  We specialise in lean six sigma, and compare your business to world's best practice.  Based on the audit results, we tailor our programs to best suit your business, as there is no one glove fits all solution.  Take the first step to improving your business, it doesn't cost you anything, but the outcomes will be substantial in process improvement, culture, staff retention and your bottom line! Visit us at www.chaseperformance.com or call us on 1300 880 338.  You can email me direct at roland.weber@chaseperformance.com for more information.

Best regards and enjoy the re-produced article below

Roland Weber

Expert Perspective

5 Ways Process Is Killing Your Productivity

BY LISA BODELL | 05-15-2012 | 10:40 AM

This article is written by a member of our expert contributor community.

If your team spends its days asking for permission before executing, taking an hour to complete expense reports or time sheets, attending redundant meetings, or answering irrelevant emails, you’ve got a problem.

Processes are supposed to help organizations scale up, improve efficiency for new hires and existing employees, and so on--but they can quickly get out of control.

In a study of U.S. and European companies, The Boston Consulting Group found that “over the past fifteen years, the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed...has increased by anywhere from 50 percent to 350 percent.” What’s more, in the most complicated organizations, “managers spend 40 percent of their time writing reports and 30 percent to 60 percent of it in coordination meetings.” No wonder people feel like they can never get any real work done.

Why do we love process so much? It offers a way to measure progress and productivity, which makes people feel more efficient and accountable. When used correctly, processes should standardize and simplify the necessary tasks that keep business running smoothly. They should enable organizations to undertake complex work, particularly as an organization grows. Expense reporting, for example, should have a process that every single employee follows every single time--that’s just common sense. Smart processes encapsulate bundles of organizational knowledge. And that’s a good thing.

But it’s not a good thing when there are so many processes in place that they restrain the people they’re supposed to help. If your team spends its days asking for permission before executing, taking an hour to complete expense reports or time sheets, attending redundant meetings, or answering irrelevant emails, you’ve got a problem. Exactly when are employees supposed to find the time to innovate when every task or topic is labeled “urgent” and every deadline is ASAP? Something will eventually give, and that something is going to be the part of the job they can keep pushing off until later.

Here are five ways process can kill production: 

1. Empowering with permission--but without action:It’s not empowering when people are given more responsibility, yet must still obtain an unreasonable number of approvals and sign-offs to get anything done. This signals a lack of trust.
2. Leaders focused on process instead of people: In an effort to standardize and sanitize everything we do, nothing at work is personal anymore. Leaders look to processes, not people, to solve problems--and it doesn’t work. Where’s the inspiration, the vision? This signals a lack of humanity.
3. Overdependence on meetings: “Collaborative” and “inclusive” are corporate buzzwords, but productive teamwork does not require meetings for every single action or decision. People become overwhelmed and ineffective when they are always stuck in meetings. This signals that politics have taken precedence over productivity.
4. Lack of (clear) vision: Great companies need a grand vision and important goals. Too often, companies have vision or mission statements laden with jargon but devoid of meaning. This signals a lack of purpose.
5. Management acts as judge, not jury: If the purpose of a meeting is to think, create, or build, management has to stop tearing people down when they propose new ideas or question the status quo. This signals a lack of perspective and openness.

Again, it comes down to priority. When we shift such a huge amount of an organization’s focus onto standardizing everything, other areas inevitably suffer. According to aBusinessWeek article called “Six Sigma: So Yesterday?,” the program ultimately did more harm than good when it was implemented at Home Depot: “Profitability soared, but worker morale dropped, and so did consumer sentiment. Home Depot fell from first to last among major retailers on the American Customer Satisfaction Index in 2005.”Over the years I’ve encountered organizations, large and small, that have essentially allowed process to becometheir culture. I’ve also seen businesses suffer when they assumed that if a process worked well for one division, it would work well for the company overall. Good processes can turn especially dangerous when they creep from manufacturing lines and finance departments into brainstorms and research labs. Some of the worst offenders have been companies that implemented overarching processes like Six Sigma, a rigidly data-driven quality-management program originally designed to tackle manufacturing problems. Fifty-three percent of the Fortune 500 have deployed it and of the Fortune 100, 82 percent have used it. Despite its manufacturing origins, Six Sigma has been used across many industries and sectors, and proponents claim it saved Fortune 500 corporations nearly a half-trillion dollars since its inception. If so many successful organizations are using it and saving money, what’s the problem, right?

Another oft-cited example of Six Sigma’s negative effects occurred at 3M. When former GE executive James McNerney took the helm in 2001, he instituted a rigorous Six Sigma program, which meant slashing costs, training thousands of employees to become program experts, and requiring extensive reporting on new products in the R&D pipeline. In the short term, especially in the eyes of investors, it seemed to work. Costs were brought under control, production speed increased, and operating margins rose from 17 percent to 23 percent by 2005. But researchers in the labs were stifled by the demands of the new metrics. 3M had a century-long history of innovation, but now R&D had been cut and inventors weren’t given adequate time to tinker with products before having to demonstrate successful commercialization. “We were letting, I think, the process get in the way of doing the actual invention," said Dr. Larry Wendling, staff vice president at 3M's Corporate Research Laboratory. 

After McNerney’s departure for Boeing in 2005--just four years after joining the company--3M began to reevaluate Six Sigma. In addition to the friction it caused among staff, its long-term growth potential appeared compromised and there were concerns that 3M had become “a less creative company...a vitally important issue for a company whose very identity is built on innovation.”

In recent years, 3M has significantly changed the way it uses Six Sigma. The company acknowledges that the program adds value in its factories, so it’s still utilized in manufacturing operations. Researchers working in the labs, however, are no longer beholden to the metrics and rubrics of Six Sigma. The shift has been successful--and there are metrics to prove it. One of the best measures of innovation efforts is the percentage of revenue that a company derives from products introduced in the last five years. At 3M, this number had traditionally hovered around 30 percent, but had dropped to 21 percent after Six Sigma’s introduction. In 2010, the number was back up to 30 percent and may soon surpass 35 percent.

I don’t mean to vilify Six Sigma unfairly. It’s just one example in a long list of top-down processes that people mistake as a silver bullet to improve their entire business. TQM, Lean Six Sigma, ISO, etc.--they all entrench organizations in policies and procedures, minimizing the organization’s innovation potential.

Today, managers are especially in a bind. They’re expected to efficiently produce outstanding short-term results, but the innovation they’re supposed to pursue could very likely hurt their careers. A 2011 PricewaterhouseCoopers survey summarizes the quandary:

“Those in middle management... found innovation disruptive to their day-to-day activities and felt it got in the way of running an efficient operation--which is what they were paid to do.”

When people’s jobs depend on meeting metrics and maintaining the status quo, can you fault them for their reluctance to expend any energy toward creation and invention?

Reprinted by permission of Bilbiomotion. Excerpted from Kill the Company: End the Status Quo, Start an Innovation Revolution, copyright 2012 Lisa Bodell. All rights reserved.

[Image: Flickr user Deja Photo]

Making it Lean - Don’t Underestimate Lawyers’ Resistance to Change

Seyfarth Shaw has learned a lot about lawyers and their resistance to change as the firm embraced Lean Six Sigma, a management approach emphasizing process improvement and efficiency in legal work.

Seyfarth Shaw chairman J. Stephen Poor outlines the lessons learned in an article for the New York Times DealBook blog. “Never underestimate the resistance to change from lawyers,” he writes. “Even more likely, never underestimate the ability of lawyers to describe virtual status quo efforts as revolutionary change. Working through a change management process intended to deal with that push-back has been a core element of our challenge for years.”

Resistance came not just from lawyers in his firm, Poor says. Most of the firm’s clients are also lawyers, and they also showed reluctance. The firm has learned that it had to build a business case for change, working in collaboration with clients.

Two other lessons learned:

• Law firms do need to change how they manage their businesses, with a focus on client demands for better value. Except for a handful of law firms, “the status quo will not drive long-term success,” he asserts.

• Don’t settle for half steps. "Marketing efforts are lovely; certainly, we all do marketing," he says. “But if one is to truly evolve a business model, the only way to avoid having it become simply a marketing effort is to recognize that it must drive through all parts of the organization."

Re-Engineering the Business of Law

BY J. STEPHEN POOR

J. Stephen Poor is chairman of the international law firm Seyfarth Shaw.

True long-term success requires businesses to improve continually and reimagine how they operate in the face of changing competition and market forces. Yet this innovative urge, which drives so much of the rest of the American economy, is largely absent from large law firms.

Instead, the measures become balancing rate growth versus discounted fees, lawyer productivity measured in tenths of hours, recruiting the partner with a book of business from one firm to another and similar yardsticks.

These address the traditional measures of law firm profitability. The need of the purchasers of legal services — at least from large law firms — continues to change, however. The pressure on in-house counsel to deliver better services using fewer resources has never been more intense. In order to meet business demands, corporate counsel are increasingly looking for firms that deliver greater value. Looking out on a landscape that includes a wider variety of choices than ever before – regional firms, national firms, global firms, virtual firms, legal outsourcing providers and contract firms, among others — their purchasing decisions continue to evolve.

If the recent recession teaches anything for the legal industry, it is this: The changing demands of our clients require the legal services profession to find different paths to deliver value to those who buy our services. Lawyers today should be asking themselves nontraditional questions: how to apply resources more effectively, to shorten cycle time and lower the cost of their work product and other deliverables, while raising the level of service. In the end, your client will reward you by giving you more work across more areas, and your relationship will deepen.

The ground on which we walk has been altered. Traditionally, large law firms fit into largely homogenous business models. Whether we recognize it or not, that has changed and will continue to shift. As we navigate a different world, our experience presents three core lessons:

Be Prepared to Examine and Reimagine the Business Model.

Our firm has been on its own, unique path for years. Over the past seven years, we’ve used a version of Lean Six Sigma borrowed from the manufacturing sector to redesign core elements of how legal work process is measured and deployed. This has resulted in a variety of tools, analyses and process improvement techniques intended to drive efficiency into the delivery of legal services – at all levels of the practice. More important, it aligns a way of thinking with the needs and requirements of corporate purchasers of legal services.

What works for us, however, may not work for every firm. Culture, current firm composition and many other factors should drive the way any firm responds to the market. The point, however, is that — other than for a handful of firms — the status quo will not drive long-term success. Change, particularly one involving lawyers, is a painful, prolonged process. Nevertheless, change, driven from innovation and a consistent focus on client needs, must drive how we look at and manage our businesses. Learning from our colleagues in the industry is important, but adapting that learning and innovating in the delivery of our services is critical.

Don’t Settle for Half-Steps.

Too often, I see firms start down a path only to stop at partial implementation or inconsistent philosophies. At Seyfarth, we realized that trying to drive different behaviors would require us to restructure things like associate evaluation (which we did by putting our compensation and advancement structures into a pure competency model) and re-examine our staffing models (for example, we eliminated a traditional summer program and replaced it with an education-based fellowship program). The global reach of our clients and their need for integrated, efficient service delivery across multiple countries, led us to create the largest multijurisdictional international employment practice, among others.

The point is not that our path is for everyone. The point is that the willingness to change and adapt business models must anticipate and address the variables that drive organizational success.

Marketing efforts are lovely; certainly, we all do marketing. But if one is to truly evolve a business model, the only way to avoid having it become simply a marketing effort is to recognize that it must drive through all parts of the organization. This will result in changes and modifications that were not anticipated but which make sense and should be adopted in order to have the overall change work properly.

Never Underestimate Resistance to Change.

Never underestimate the resistance to change from lawyers. Even more likely, never underestimate the ability of lawyers to describe virtual status quo efforts as revolutionary change. Working through a change management process intended to deal with that push-back has been a core element of our challenge for years. We consciously developed methodologies that linked to the history and culture of our firm or used client voices to support and build the business case for change. As we were able to demonstrate success on smaller scales, we were able to build agents for change that effectively permeated the firm.

What we did not anticipate was the resistance from other crucial stakeholders – especially clients. Much of what we’ve done is most effective when deployed in a collaborative change process with clients. What we overlooked at the outset is that, by and large, our clients are lawyers, too, and many of them are the products of the culture of their own business. Understanding the various viewpoints and building the business case to involve this crucial constituency was something we learned along the way. The nature of the process requires a continuous, but slow march toward improvement and adaptation. Some things we tried worked and some did not. Nevertheless, the continuous move forward takes persistence and, perhaps, a bit of stubbornness.

Hospital wins award through planning (process improvement)

This article explains how simple process improvement activities resulted in great results.  To find out more about how we can assist you health organisation through cost neutral solutions in the same way please contact us at focus@chaseperformance.com or call us on 1300 880 338.  Alternatively you can also visit our web site: www.chaseperformance.com

Planning at Waikato Hospital wins award

A Waikato Hospital project looking at delivery and capacity planning within the hospital, has been deemed so effective, it has won an award at tonight's Waikato District Health Board Best of Health Awards.

By far the biggest category, there were 14 entries in the process improvement category claimed by Waikato Hospital, which looks at recognising how planned improvement activities - both clinical and non-clinical - led to significant improvements in patient care or process improvement.

Process improvement activities aim to improve customer and staff satisfaction; and at reducing or eliminating process waste such as resources and time.

A brief description of the project

Waikato Hospital historically provided a set number of beds over the year with closures allocated primarily to known low elective periods, such as Christmas.

The associated nursing staff rosters were driven by budgeted matrix, which did not necessarily align with planned or acute demand.

There was minimal knowledge of seasonal demand, which regularly resulted in high elective surgical cancellations, large numbers of patients nursed outside of their specialty areas, high nursing costs associated with misaligned rosters with workload, and scheduled theatre sessions poorly utilised.

As a result of this project, there has been a focus on improved planning to place patients in the right place, in the right beds, at the right time. There has been an increase in surgical throughput and a decrease in cancelled surgeries.

This has therefore improved patient access to elective services and patients are spending less time waiting in ED for a ward bed.

Judges comments

"This project is using an off the shelf programme to the max; when it was obtained it was used DHB wide and implemented thoroughly. From the patient's perspective, this has had a monstrous impact.

"It is amazing in a hospital the size of Waikato, to embed something this large so quickly and get staff confidence in its use."

Other projects that received honourable mentions at the awards were:

Community pharmacy anticoagulation management service from Pharmacy 547

The Waihi Project (family violence) from Population Health, Waikato DHB

Waikato virtual lesion clinic from Waikato DHB's Dermatology Department; and

Working together to reach the health target of 90% of two-year-olds being fully immunised by June 2011 from Toiora Primary Health Organisation

For more information about the Best of Health Awards, other entries and the awards evening, visit www.waikatodhb.health.nz/bestofhealth

Tim Woods - 7 + 1 Wastes (Taken from Toyota Way Fieldbook)

Here is some more information in regards to the seven plus one wastes often discussed around Lean Six Sigma.  To find out how we can help you eliminate these from your business through a cost neutral solution while creating the bottom line benefits for your organisation send me an email at roland.weber@chaseperformance.com or visit our web site www.chaseperformance.com.

With offices in Melbourne, Sydney, Perth, Adelaide & Brisbane we can assist you with a national program.  You will get access to all our experts, MBA's and back belts to maximise the benefits to your business.  We do not teach but coach.  We actively get involved on the floor, rather than just classroom style presentations.  Everyone participating in our programs will gain a nationally recognised qualification as an added bonus.

Transportation or conveyance. Moving work in process (WIP) from place to place in a process, even if it is only a short distance. Or having to move materials, parts, or finished goods into or out of storage or between processes.

Inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime,

and long setup times.

Movement. Any motion employees have to perform during

the course of their work other than adding value to the part, such as reaching for, looking for, or stacking parts, tools, etc. Also, walking is waste.

Waiting (time on hand). Workers merely serving as watch persons for  an automated machine, or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of no stock, lot processing  delays, equipment downtime, and capacity bottlenecks.

Overproduction. Producing items earlier or in greater quantities than needed by the customer. Producing earlier or more than is needed generates other wastes, such as overstaffing, storage, and transportation costs because of excess inventory. Inventory can be physical inventory or a queue of information.

Overprocessing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher quality products than is necessary. At times extra “work” is done to fill excess time rather than spend it waiting.

Defects. Production of defective parts or correction. Repairing of rework, scrap, replacement production, and inspection means wasteful handling, time, and effort.

Skill under utilised Losing time, ideas, skills, improvements,

and learning opportunities by not engaging or listening to your employees.