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
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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
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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
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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
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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 !"
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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
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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
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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
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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
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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
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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
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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
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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
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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."
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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Debbie Nightingale, MIT ? 2002
Migrating From Taylorism...
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Debbie Nightingale, MIT ? 2002
"The factory will be an information network.”
...To Druckerism (The Notion of
the Knowledgeworker)
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Debbie Nightingale, MIT ? 2002
Breadth of Knowledge
Depth
of
Knowledge
Source : Profile 21, SME,Dearborn, MI
...Has Led to an "Ideal
Knowledgeworker Profile"
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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
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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.)
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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
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Debbie Nightingale, MIT ? 2002
The Process of Innovation
Technology
Market
INNOVATION
Source : Tom Allen, Sloan School of Management
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Debbie Nightingale, MIT ? 2002
Departmental Organization
D1 D6D2 D3 D4 D5
Technology
Market
Source : Tom Allen, Sloan School of Management
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Debbie Nightingale, MIT ? 2002
Technology
Market
D1 D2 D3 D4
Source : Tom Allen, Sloan School of Management
Departmental Organization
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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.
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Debbie Nightingale, MIT ? 2002
Project Team Organization
P1 P6P2 P3 P4 P5
Technology
Market
Source : Tom Allen, Sloan School of Management
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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
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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).
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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
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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.
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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
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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
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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
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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
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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