People/Organizational Issues in the Lean Enterprise Professor Debbie Nightingale October 21, 2002 2 Debbie Nightingale, MIT ? 2002 "The soft stuff is the hard stuff” -Chris Cool, VP, Lean Enterprise Northrop Grumman, ISS Sector 3 Debbie Nightingale, MIT ? 2002 Issues in Lean Enterprise Implementation ?How to organize for lean ?Change management ?Education ?Training (re-training) ?Teams ?Global/Virtual teams ?Excess people ?Metrics 4 Debbie Nightingale, MIT ? 2002 Socioeconomic Drivers ?Globally rising and converging standard of living ?Increasing rate of technological change ?Environmental responsibility ?Profound increase in understanding of “needs” ?Customer ?Employees ?Stockholders ?Partners 5 Debbie Nightingale, MIT ? 2002 Changing Roles of the Enterprise, the Individual & the Community ? Leading edge companies will succeed even if a State or Nation does not ? The Leading Edge Corporation will be an opportunist that capitalizes on the competitive resources provided by the individual and the community ? Sustained access to these resources will require a company to be a proactive partner with the community and the individual Source: Next Generation Mfg., 1997 6 Debbie Nightingale, MIT ? 2002 Source : Gerhardt Schulmeyer, President, ABB-North America A Premise " It is not the physical facilities but the organizational capability that will differentiate success from failure of the enterprise !" 7 Debbie Nightingale, MIT ? 2002 Human Resource Shifts Perform task Reward for doing Skills life equal to career life Training as 1% of payroll Individual treated as cost Limit human potential Perform task & provide knowledge Reward learning and doing Skills obsolescence at 20% per year Training as 7% of payroll Individual viewed as asset Maximize human potential From To Source: Next Generation Mfg., 1997 8 Debbie Nightingale, MIT ? 2002 Shifts Required to Support Teaming & Partnering as a Core Competency Physically control core competencies From To Reward individual contribution Transfer knowledge within team Single decision style: hierarchy Material supply chain Control the knowledge of core competencies Reward individual contribution and team success Transfer of knowledge between teams Multiple decision styles: hierarchy, team, empowered Knowledge supply chain Source: Next Generation Mfg., 1997 9 Debbie Nightingale, MIT ? 2002 Knowledge Supply Chain ?Treat knowledge as a commodity ?Treat the knowledge process as an integrated supply ?Utilize the core competencies of industry and academia ?Apply the principles of supply chain management 10 Debbie Nightingale, MIT ? 2002 Requirements for Competitive Excellence New technical & behavioral discoveries that result in new technologies, new principles University New knowledge converted into new teachings, new talent Industry Continuously educated employee using latest knowledge for effective execution of technical & management process Leading-edge product and process platforms that satisfy customer needs Knowledge Generation Knowledge Transfer 11 Debbie Nightingale, MIT ? 2002 Knowledge Development Transform raw knowledge into codified Principles & Practices The Knowledge Process Knowledge Transfer Produce Documentation & People that will facilitate knowledge delivery Knowledge Generation Build a knowledge base via Research, Adaptation Discovery, Experience Knowledge Need & Use Implement & adjust knowledge to meet Customers’ Needs 12 Debbie Nightingale, MIT ? 2002 Organizational Aspect Traditional Practice Shift in Practice Authority Based on Position Based on Knowledge Decision Making Close to Top Where Action Is Employee Contribution Limit knowledge & Skills Enhance Information Closely Control Share Widely Rewards Individual Preference Teamwork Status Highlight Differences Mute Differences Supervision Watchdog Resource SOURCE: MSB REPORT OF NATIONAL RESEARCH COUNCIL Corporate Culture Change 13 Debbie Nightingale, MIT ? 2002 Responsive Practices & Culture Teach Productivity Teach the Need to Change Customer Satisfaction My Standards and Metrics Teach Innovation & Creativity Teach the Process of Change Society / Stakeholder Satisfaction Our Standards and Metrics From To Source: Next Generation Mfg., 1997 14 Debbie Nightingale, MIT ? 2002 Stand Alone Equip Integrated Equip/ Systems Single Discipline Multi-discipline Employees Employees To make change happen means we must change the way we are and perceive we are measured. The Fundamental Transition 15 Debbie Nightingale, MIT ? 2002 Source: Machiavelli, The Prince, 1513. Making Change Happen Is Not Easy "It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage - than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old and merely lukewarm defenders in those who would gain by the new." 16 Debbie Nightingale, MIT ? 2002 Hypothesis: if the beliefs are not aligned, performance suffers. SOURCE : Boston College Performance Assessing a Corporate Culture Organization Driving Beliefs Strategy Structure Systems People Beliefs Managerial Beliefs 17 Debbie Nightingale, MIT ? 2002 Levels of Culture The visible, hearable, feelable manifestations of the underlying assumptions, e.g. behavior patterns, rituals, physical environment, dress codes, stories, myths, products, etc. Artifacts Source : Ed Schein, Sloan School of Management 18 Debbie Nightingale, MIT ? 2002 Levels of Culture The espoused reasons for why things should be as they are, e.g. charters, goal statements, norms, codes of ethics, company value statements Shared Espoused Values Source : Ed Schein, Sloan School of Management 19 Debbie Nightingale, MIT ? 2002 Levels of Culture The invisible but surfaceable reasons why group members perceive, think, and feel the way they do about external survival and internal integration issues, e.g. assumptions about mission, means, relationships, reality, time, space, human nature, etc. Shared Basic Assumptions Source : Ed Schein, Sloan School of Management 20 Debbie Nightingale, MIT ? 2002 Source: Ed Schein, Sloan School of Management Cultural Interfaces ?Nations/Ethnic Groups ?Government/Industry ?Industry/Industry ?Company/Company ?Division/Division ?Functional Groups ?Hierarchical Echelons ?Occupational Communities 21 Debbie Nightingale, MIT ? 2002 Cultural Change Issues 1. Identify the business problem or issue 2. Develop the strategy & tactics to deal with the issue/solve the problem 3. Assess the present state of the culture to identify how assumptions will aid or hinder what is to be done 4. Focus on those cultural elements that will aid you, ignore the ones that will hinder you unless they are absolute constraints 5. Identify the people in your organization who are “culture carriers” of the elements that will aid you 6. Empower these culture carriers & build change teams around them 7. Develop processes for overcoming normal resistance to change Source : Ed Schein, Sloan School of Management 22 Debbie Nightingale, MIT ? 2002 Source : Ed Schein, Sloan School of Management The Change Process Overcoming resistance to change by creating “psychological safety” -- The Change Process In order for new learning to occur, survival anxiety has to be greater than learning anxiety. This is best accomplished by reducing learning anxiety. 23 Debbie Nightingale, MIT ? 2002 The Change Process 1. Creation of a compelling positive vision If I learn this new stuff how will we all be better off? Why should one do this? Where is it all leading? 2. Involvement of the learner in the change/learning process Can I design my own learning process? 3. Formal training What do I need to know to fulfill the new vision, what is involved in the new behavior & attitudes? Source : Ed Schein, Sloan School of Management 24 Debbie Nightingale, MIT ? 2002 The Change Process 4. Informal Training Will I get the “know-how” and skill of handling the new situations? This level of training involves redefining what things mean and changing the standards by which things are judged. 5. A practice field and coaches Can I try my hand in situations where mistakes are OK and I can learn from them? Will there be coaches around to tell me whether I am doing OK and how to do better? 6. Corrective feedback If things are done correctly or incorrectly will there be continuous appropriate feedback? Source : Ed Schein, Sloan School of Management 25 Debbie Nightingale, MIT ? 2002 The Change Process 7. Positive role models & examples: examples & cases of what not to do Will we observe our own managers all the way up the line “walking the talk” and setting positive examples? Are there stories, myths, parables that exemplify correct and incorrect behavior and attitudes? 8. Support groups in which learning problems can be aired Are there formal opportunities in which learning problems can be aired and discussed in a supportive environment? Source : Ed Schein, Sloan School of Management 26 Debbie Nightingale, MIT ? 2002 The Change Process 9. A reward and discipline system consistent with the new learning If I or others do it right will we get consistent rewards, and if I or others are failing in some way, will we get appropriate feedback; if others are violating the new rules will I observe them getting appropriately disciplined? 10. New structures and routines to support the new behavior If I learn the new things and do them will my behavior be “normal” in the organization? Source : Ed Schein, Sloan School of Management 27 Debbie Nightingale, MIT ? 2002 The Bottom Line Questions 1. Does culture have to change or do you have to change business processes within the present culture? 2. If culture has to change, can you build on enhancing cultural strengths rather than eliminating elements of culture? 3. If cultural elements have to be eliminated, are you prepared to deal with the anxieties involved? 4. Are you willing to allocate the time and resources necessary to actually change the culture? Source : Ed Schein, Sloan School of Management 28 Debbie Nightingale, MIT ? 2002 Migrating From Taylorism... 29 Debbie Nightingale, MIT ? 2002 "The factory will be an information network.” ...To Druckerism (The Notion of the Knowledgeworker) 30 Debbie Nightingale, MIT ? 2002 Breadth of Knowledge Depth of Knowledge Source : Profile 21, SME,Dearborn, MI ...Has Led to an "Ideal Knowledgeworker Profile" 31 Debbie Nightingale, MIT ? 2002 1. Team 2. Manager 3. Shared Formation Centered Leadership Manager’s Role Team Member’s Role One on One Supervision Directs each Member’s Work Do What They Are Told Group Leader Focus on Goals Manage Group Work Together As a Group Team Coordinator Members are Goal Focused Shared Leadership Initiate Actions Track Data Lead Projects The Teamwork Continuum 32 Debbie Nightingale, MIT ? 2002 4. Self - Directed 5. Self - Managed Boundary Manager Coaches Team Manages Interface Run Day - to - Day Operation Resource “Staff” Provide Help on Request Team is Accountable for own work The Teamwork Continuum (cont.) 33 Debbie Nightingale, MIT ? 2002 Individual Group Organization Financial Non-Financial To successfully reward teamwork, research has found that all six of the matrix elements must be clearly defined. SOURCE : Dr. Ann Majchrzak, USC. Rewarding Teamwork Organizing for Product Development and Transfer to Manufacturing Source : Tom Allen, Sloan School of Management 35 Debbie Nightingale, MIT ? 2002 The Process of Innovation Technology Market INNOVATION Source : Tom Allen, Sloan School of Management 36 Debbie Nightingale, MIT ? 2002 Departmental Organization D1 D6D2 D3 D4 D5 Technology Market Source : Tom Allen, Sloan School of Management 37 Debbie Nightingale, MIT ? 2002 Technology Market D1 D2 D3 D4 Source : Tom Allen, Sloan School of Management Departmental Organization 38 Debbie Nightingale, MIT ? 2002 Source : Tom Allen, Sloan School of Management Time and Coordination ?Time can always be substituted for coordination. ?And the converse: ?Improved coordination can reduce development time. 39 Debbie Nightingale, MIT ? 2002 Project Team Organization P1 P6P2 P3 P4 P5 Technology Market Source : Tom Allen, Sloan School of Management 40 Debbie Nightingale, MIT ? 2002 Matrix Organization Technology Market D1 D6D2 D3 D4 D5 P1 P2 P3 P4 P5 P6 P7 P8 Source : Tom Allen, Sloan School of Management 41 Debbie Nightingale, MIT ? 2002 Matrix Organization Technology Market D1 D6D2 D3 D4 D5 P1 P2 P3 P4 P5 P6 P7 P8 Source : Tom Allen, Sloan School of Management 42 Debbie Nightingale, MIT ? 2002 Dept Head Dept Head Dept Head Dept Head Dept Head Dept Head Proj Mgr Proj Mgr Proj Mgr Proj Mgr Proj Mgr Proj MgrMa r k e t Technology Source : Tom Allen, Sloan School of Management Matrix Connections to Market and Technology 43 Debbie Nightingale, MIT ? 2002 The Basic Tradeoff and Dilemma in Product Development Organization Departmental Organization ? Departmental structure is more closely mapped to the structure of the supporting technologies ? It thereby provides a better connection to those technologies and better ongoing technical support to the project effort. ? This is, however, accomplished at the cost of much greater difficulty in coordination of the project tasks and less responsiveness to market change. Project Team Organization ? Project Team structure groups people from different disciplines together in a single team all reporting to a common manager. ? It thereby provides better coordination of the project tasks and increased sensitivity to market dynamics. ? This is, however, accomplished at the cost of a separation from the disciplinary knowledge underlying the project effort. When this is carried to an extreme, it will gradually erode the technology base of the organization. Source : Tom Allen, Sloan School of Management 44 Debbie Nightingale, MIT ? 2002 Source : Tom Allen, Sloan School of Management Contact with Technology ?If Departmental Organization provides better connection to technology, are all technologies equal in the degree to which this necessary? ?The answer, of course is no. ?What then is it about different technologies, that determines the degree to which close contact is necessary? ?The answer is, the rate at which new knowledge is being generated. 45 Debbie Nightingale, MIT ? 2002 Rate of Change of Knowledge dK dt M a t u r e , s t a b l e t e c h n o l o g i e s R a p i d l y c h a n g i n g t e c h n o l o g i e s Source : Tom Allen, Sloan School of Management 46 Debbie Nightingale, MIT ? 2002 Source : Tom Allen, Sloan School of Management Coordination ?Turning to Project Team Organization, if this form of organization provides better coordination, the question follows, are all projects equal in the amount of coordination needed? ?The answer is no. ?What then is it about different projects that determines the amount of coordination that is needed? ?The answer is the degree of interdependence that exists in either the product architecture or among the tasks that must be performed in product development. 47 Debbie Nightingale, MIT ? 2002 Interdependence of the Architecture or of the Tasks to be Performed dK dt I Source : Tom Allen, Sloan School of Management 48 Debbie Nightingale, MIT ? 2002 Organizational Structure Space I dK dt interdependence I = rate of change of knowledge dK dt = Source : Tom Allen, Sloan School of Management 49 Debbie Nightingale, MIT ? 2002 Three Possible Situations: x x x x x x o o o o o o o Project Team dK dt I ss + + + + + + + + + + Departments Source : Tom Allen, Sloan School of Management 50 Debbie Nightingale, MIT ? 2002 Duration of Project Assignment Department Project Team dK dt I ss T i T 2 T 1 T 1 >T 2 Source : Tom Allen, Sloan School of Management 51 Debbie Nightingale, MIT ? 2002 Source : Tom Allen, Sloan School of Management Structuring the Organization ?Standard Industrial Practice ?Ignores the rate at which technologies are developing (despite the fact that this can often be measured). ?Usually ignores the interdependencies in project work (seasoned project managers are an exception). ?Focuses on project duration (and usually makes the wrong decision on this parameter). 52 Debbie Nightingale, MIT ? 2002 How to Handle this Situation? dK dt I ss + x x x x x x o o o o o o o Project Team Departments ++ + + +++ + + ?? Source : Tom Allen, Sloan School of Management 53 Debbie Nightingale, MIT ? 2002 Source : Tom Allen, Sloan School of Management Two Possibilities: ?Re-partition the overall problem to reduce interdependencies. ?Form a project team but rotate personnel between the project team and the departments for time periods that are related to the rate of change of their disciplines. 54 Debbie Nightingale, MIT ? 2002 Integrating the Lean Enterprise Requires Expansive Leadership ?Leaders of change ?System integrators ?Process optimizers ?Agility, flexibility implementers ?Technologists ?“Futurists” ?Globally astute ?Marketers 55 Debbie Nightingale, MIT ? 2002 Comparison of Behavior Attributes Confusion Unnecessary commentary Irrelevant observations Random thoughts Self-imposed barriers Ego Self-awareness Humility Compassion Suspension Deference Calmness Fat Behaviors Lean Behaviors Source: M.L. Emiliani, Lean Behaviors, MCB University Press 1998 56 Debbie Nightingale, MIT ? 2002 Comparison of Behavior Attributes Irrationality Revenge Inaction Positions Interpretations Uncertainty Quietude Reflection Honesty Benevolence Consistency Generosity Fat Behaviors Lean Behaviors Source: M.L. Emiliani, Lean Behaviors, MCB University Press 1998 57 Debbie Nightingale, MIT ? 2002 Comparison of Behavior Attributes Negativity Excess Gossip Sarcasm Preoccupation Ambiguity Extreme flattery Patience Humor Understanding Respect Listening Observation Trust Fat Behaviors Lean Behaviors Source: M.L. Emiliani, Lean Behaviors, MCB University Press 1998 58 Debbie Nightingale, MIT ? 2002 Comparison of Behavior Attributes Cynicism Subjectivity Bias / prejudice Deception Selfishness Pride Criticism Sincerity Equanimity Objectivity Discipline Rectitude Wisdom Balance Fat Behaviors Lean Behaviors