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Wednesday, June 3, 2015

KATA - A New Habitual Rotuine for Culture Change

Truly, most organizations remain far away from establishing a solid continuous improvement system, and current management behavior rarely leads corporations to do what they should do in terms of both process and people management. Bad habits, behaviors done with little or no conscious thought, continue to affect culture and hold companies back from success.

Culture drives competitive advantage in companies like Toyota, which has a psychology of process improvement unlike its other competitors.

In my previous post I presented how certifications and credentials don't build leadership and really do nothing in transforming cultures. Hiring professionals won’t, by itself, turn around an organization. However, having a real continuous improvement system and an embedded culture of improvement will. A system that empowers employees to make changes, motivates them in the right way, aligns goals and efforts with organizational strategies and vision, develops leaders continuously, bases management decisions on real situations, and makes improvement a part of everyone’s daily routine is a system with a high chance of success. This is why Toyota put too much effort in developing and coaching leaders through practicing a real problems solving process and repeatedly go through all the steps of the plan-do-check-act.

If certifications can drive competitive advantage, why do Toyota use a complete different process for recruitment? (described in Lean Leadership). It is of course not bad to basically choose those who hold bachelor or master degrees, but it is better to assess how they are going to use their skills within the company. And hire those who are openness to learn new things, committed to self-development and have the ability to work in a team. The first step in any business is getting the right people on board with the appropriate skills and expertise. But you can't force someone to learn if he doesn't want to learn.

I have published an article in the Industrial Management May/June 2015 that is based on Mike Rother's deep observation on Toyota. The article states how other companies can learn lessons and utilize kata to form a new improvement habit that will lead to a cultural change.

In this article I'm going to introduce what is kata, how it leads to better culture, and how problem solving process can be utilized to change culture.

What is kata?

Kata is a Japanese term and is used in many Japanese martial arts. Literately mean "way of doing" and refers to a series of practice moves to build on form and technique. 

What is the core form and technique that we want to build in leaders?
1. The ability to systematically improve processes toward a clear target (Improvement Kata) and
2. The ability to coach others on the Improvement Kata (Coaching Kata).

When we say Toyota Kata we are really describing the Toyota habits for continuous improvement to solve problems and the Toyota habits for continuous coaching to mentor leaders.

Improvement kata clearly present the distinction between process improvement and the psychology of true lean improvement.

Kata is the Mike Rother's edition based on his own observation on Toyota. Mike Rother decided to drop the phrase of problems solving and use "kata" to describe the Toyota way of problems solving which was initially described in the Toyota series by Jeff K Liker. 

As a result of Mike Rother's observation in many organizations striving to solve problems, he came up with a conclusion to breakdown the problem into several process characteristics called (target conditions), and use several PDCA cycles to reach the target instead of using just one big PDCA. Those target conditions will drive us through the direction of the challenge. Because there is an unclear territory and the road is full of fog, you have to slowdown and repeat each PDCA cycle toward the target condition, the outcomes and the feed backs from each cycle will help to continue moving and eliminating obstacles as found so we can at the end meet the big challenge and solve the problem completely.

Example: classic process improvement VS lean improvement

Take, for example, the question "What do you want to do to improve the process or the work?" The answer can be "We need to apply kanban, remove wastes, standardize work flow, and reduce inventory turns." This is what most companies do, and it represents a poor alignment of goals with strategies.

Lean improvement, on the other hand, strives toward an objective. A better question would be “What is your target?” The answer could be “Improving the warranty cost by 40%.”

The second case clearly defines warranty cost as a stretch goal to strive for. We know where we want to be. And improving quality or reliability is a target condition that we must meet to help reach our goal. It should be a measurable thing, like reducing defects in design by 10%. The first example has no target, and we could spin our wheels improving things while not knowing where we want to be or where this improvement will lead us.

One of the most fundamental mistakes made by many companies is trying to improve something without a clear strategy that serves the customer requirements and finally the success of the business. Definitely, building quality for the customer will allow the organization to improve customer experience and achieve 100% customer satisfaction. This can serve the long term strategic objective of being a leading supplier.

Another example is the work standardization process. The human mind always seems to latch on to criticism of change. Workers will wonder why they are standardizing the work. After all, they’re OK with the current process. Why should we put forth energy and effort instead of focusing on a higher priority? If improvement doesn’t have a clear direction and assigned priority, people will consider it low priority and continue with their current methods.

Taking also the example of applying kanban, if we try to apply kanban with a pull system this will reveal lots of issues. Kanban don't create issues but just reveal them. When issues are surfaced, people will resist the change and we have seen and heard many companies saying that kanban caused problems to them and kanban doesn't work. Kanban is a method to control inventory buffers. A pull system connect the processes through a chain and link the chain to the customer demand instead of a schedule.  If there is no clear target for using kanban, employee won't be encouraged to face problems, fix them, and find permanent solutions to improve the health of the system.

When you implement kanban, you will really have tons of issues to tackle such as:

1. How you will operate the purchase market?

2. How are you going to design the delivery routes?
3. How many parts for each kanban bin or container to use?
4. How to signal parts needed at the production cells?
5. How to deliver parts at the point of use?

Because the company's productivity has operated for years with a system that produces according to a schedule with little or no attention to the real customer demand (a push system), and because the processes were building large batches of Work-In-Process Inventories (mass production), the company is now experiencing these problems that have remained hidden for years when start switching to a complete pull system and use kanban with that system to control the inventory buffer. It is the time to think about solutions and engage your employees at all levels.

The guidelines on how to start thinking about these particular issues and solve them will be presented in my up-coming Lean book which I'm still writing.

Kata - aligns goal, plan, and method

Conclusively, every company should have clear strategic objectives that serve the business needs and that are articulated with the company's long-term vision. Concrete & stretch goals should be used with the employees and with the company's different departments. The reason why I say stretch goals are important, simply because you can't tell your employees or workers that you need to be number one leading supplier! You have to use some goals at the operational level that reflects what your business really needs. Those goals should be concrete, measurable, objective, and have a time frame with an action plan. The process of aligning goals vertically (top down) and horizontally (across different functional department) is done using the Hoshin Kanri process. Such a system will allow employees to generate ideas and explain how their ideas are aligned with the company's goals. The system in itself is a high motivational system. There will be no more need for financial motives that kill motivation and undermine performance.

Core values and putting people before process

Any company should have "core values" articulated with the vision. Achieving excellence requires teamwork, trust and respect for people. Core values are like guideposts that will point your workforce toward your ultimate goal of working in a culture of improvement.

When the management board choose to hire external experts rather than developing their regular employee, is not this a contrary to respect for people which is one of the main Toyota production system pillars? When management create a continuous improvement department, hire the improvement consultants and relegate the improvement to them. Would this really serve the efforts of changing culture and developing people? 

And if we look to the situation from the improvement perspective, can such a parallel team be powerful to effect change and make improvement? Of course they have lack of experience about the company’s culture and lack of knowledge about the situation at the gemba.

What usually happens when the outsourcing consultant leaves after the work is done? All knowledge is gone! The regular employees will have no experience to keep managing the improved processes or continuously improving them to face the future challenges. They have not been trained on the culture of continuous improvement and have not been contributed in the transformation process. A part from the fact, that all powerful lean tools should be used by the company’s leaders and the factory managers who have the capability, power, responsibility to effect changes. Improvement should be done by people who are directly managing the work day by day not by a parallel team. The leaders who manage the work day by day will be responsible for coaching people who do the work. And together those people will own, operate, develop, and continually improve their processes. 

Companies that travel the consultant route should make sure they use the temporary personnel to share lean expertise and knowledge with the rest of the workforce. But do these consultants train employees properly and use the appropriate method to help stimulate their thinking, change bad habits and form new habits? Are they acting as real mentors? Are they using the Toyota Way and the kata approach? Or they just teach people on some tools and techniques? I have seen consultants who teach employees their thoughts, and their own ways of doing things not what those employees really need to improve their daily work and change the old habits.

Distinction between traditional training VS continuous coaching habits 

As Mike Rother presented, Toyota inserted continuous improvement into its employee DNA by using the kata approach. Improvement became a part of each employee’s daily routine, something that can’t be achieved through formal training or classrooms.

So why do we need more than just a classroom training? Human brains need continuous refreshing and feeding. We learn by doing, and problems give us lessons to learn. What we learn through formal educational programs can’t be standardized for all industries and all cultures. What might have worked in a company may not work in the other. Situations are different even for the same industry. This type of training anyway don’t change behaviors and cultures and can only provide a specific level of awareness. People won't learn by just listening to you or watching you doing it.

While many companies still rely on the formal educational programs to train its employee, Toyota use a completely different pattern of learning. There is a problem that most of companies still think of training as teaching people how to solve problems, Toyota teach people how to develop solutions for problems. Toyota teach its people a routine of thinking and acting that harness the human capability to improve and to solve problems. Toyota don’t teach its employee tools and techniques. In fact Toyota production system don’t offer us solutions, but a sense and a mean to develop solutions.

I have seen many companies who want to train their employee tend to ask them what skills or performance do you need or you don’t have so we can train you on? The training is delegated to the training department or human resources who might asses the employee learning and performance and train them accordingly. As Mike Rother emphasized, it is not possible to objectively assess someone’s own performance and see what skills he don’t have, this is because we tend not to perceive our own habits and we don’t know what we don’t know!

A part from the fact, most companies don’t have a real system to coach their employee on how to achieve the competitive targets and get the desired results within the organization strategy and values. However, still some good companies are seeking to continuously develop their employees and provide a good environment for learning. For example, they have libraries so employees can read. They encourage people to learn and produce new ideas under a highly motivated system. While this is a good start, but if improvement is not embedded in the daily routine of the organization, it won’t be everyone’s priority to learn and act.

In Toyota, in continuous coaching to build challenging leaders also called Coaching Kata, people are being mentored on how to improve the process toward a target.

The continuous coaching at the workplace, the utilization of problems as an opportunity to learn and grow, the several coaching cycles that leader has to take are what allowed Toyota to come out stronger after several recall crises. Still Toyota making profits higher than the other automakers.

As Jeff remarkably presented in Toyota Under Fire, this culture is what allowed Toyota to stand out during the recession and the recalls crisis. And overcome the economic problems and the increase of oil prices. Keep in mind that a culture is forever. A good toolkit under a stressed management system will die quickly.

Repeating the PDCA cycle can form new habits

Practicing new behaviors will shift the employees out of the existing routine and, over time, influence people’s thoughts and actions. In the long term, repeated new habits can lead to a culture of continuous improvement. People should follow the plan-do-check-act enough times, so it becomes natural way of thinking.

For a new method to become a routine, you need to learn, develop, and coach by solving a problem. Toyota has several steps of problems solving. Those steps are repeated through the famous wheel of plan-do-check-act

1. Define the problem relative to the ideal (plan).
2. Break down the problem into manageable pieces (plan).
3. Find the root cause of the problem (plan).
4. Set the targets for achievement (plan).
5. Select the suitable solution from different countermeasures (plan). 
6. Implement the plan (do).
7. Revise the outcomes as expected (check).
8. Find out what is going wrong, adapt, adjust, and then repeat the cycle (act). 

As you can see, the plan phase is invoked five times before proceeding to the do phase. This is to ensure both the quality of the implementation and that the selected countermeasure will solve the problem. Lean emphasize on the plan. And the plan phase cannot be created without a daily observation at the gemba to find the root causes, gather facts, discuss things with the process operators and develop the best countermeasure from different alternatives.

Unfortunately, many leaders would jump into the do phase without spending enough time observing the situation to find the root cause. The most enjoyable part for the leader is the “do,” but jumping to the do means not enough time has been spent on understanding. A quick fix not only might not solve the real problem, it could create wastes in other linked areas.  

Sometimes jumping to the do phase quickly escalate the problem. For example, I one time had an electric breakdown in my car. The technician suggested some countermeasures to solve the issue. He suddenly jumped to a conclusion that the problem is a spark plugs coilpack. I changed the coilpack and paid $350, then guess what, it was not the problem! The problem was an ECU faulty that cost around $1500. The total cost of the problem turned to be $1850 instead of $1500 plus the other wastes in time, effort and resources.  

However, spending time in the plan and doing it slowly doesn't really mean that you will stay there forever! What if you can't find the proper solution? And the best countermeasure? You have then to try and error. You have to do something which may reveal more countermeasures.  

In the do: you implement the countermeasure. Be careful! Many managers think that "do" phase is the end of the issue, and once you push the button, the system will go live and run forever. Keeping the process monitored is necessary, continuously coaching and supporting people to avoid slipping back is something you should keep doing during the "act" phase.

In the Check: after implementing the solution, people will not continue in the same way as you wished. They won't follow the standard all the time. Supporting people, continuously motioning them, coaching them and developing them until the new way becomes a routine is the key to a perfect solution. You may not achieve this in the first PDCA cycle. So you have to repeat it continuously and keep supporting people until the new standardized process become a routine.

In the Act: and here is where the start of the next cycle begins. Your next plan will be based on the feed backs you got from the "check" stage. In this phase you should figure out what did work and what didn't. And standardize what worked. 

The key success of Toyota's continuous improvement process is the effort that managers or leaders put in the PDCA cycle. It is a remarkable learning cycle! As you go in each PDCA you will learn different and higher level of skills. This should be done under the watching eye of the mentor. 

When a problem slipped back, the question should be, have you rotated the PDCA wheel enough time? A car wheel spins too often before you reach the destination. The same is here, the PDCA need to spin a lot before you reach your target, achieve a stable process, and form new habit

Thanks you for taking the time to read this piece!

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All comments, explanations and discussions are greatly welcome.

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