A well-defined management system is key to meet customer and organisational purpose. The management system is the organisation’s operating system. The way we approach management and improvement. When considering the design of the lean management system, it helps to think about two fundamental requirements. Firstly, how we organise ourselves to manage performance and secondly, how we organise to manage improvement.
We visit many organisations. Often, there is tension between these two requirements. This results in confusion. Senior leaders ask for both the output required today and to improve business performance. Managers have both activities. But how can they achieve the latter when they don’t have the stability to maintain the current required performance? The tension between maintenance (ensuring current performance meets the standards defined) and improvement (moving to a new standard) is the main reason we started our Lean Learning Journey platform. In it, we share a process to develop problem solving capability and have more recently gone on to look at how to stabilise processes through standardised work.
To successfully implement both maintenance and improvement it helps to think about them as two discrete activities. Each requires two different routines to manage them effectively. To illustrate it is useful to define the differences between performance and improvement management systems.
Performance Management System
This is a structured, visual approach to monitoring business performance, highlighting issues and reacting to them in a timely manner. Often people call this the “daily management system.” However we think this is misleading as operational issues have different time frames over which we need to manage. On the production line we may need to be able to see status to the takt time, hourly and/or daily performance as well as trends over longer timeframes. The performance management system enables the organisation to run on a daily, weekly, monthly basis to maintain and sustain a defined level of performance. It relies upon regularly gathering accurate data about how a process is performing and having a method to use that data to highlight problems or gaps and take action to close them. The performance management system maintains stability and sustains any future step change improvements that are made.
Improvement Management System
This is the method which enables the organisation to make step changes in performance to improve its competitiveness over the medium and longer term. The organisation identifies breakthrough activities and sets priority aligned with the vision and goals of the business. Raising current performance levels can take place through specific projects and small incremental improvements.
The result of Performance Management + Improvement Management = Continuous Improvement
The diagram above shows the interplay of the two systems. Just having a Performance Management System leads to slow, gradual improvement (the blue line). Just having an Improvement Management System leads to erratic, unsustainable improvement results – like a saw tooth (the green line). Sustainable Continuous Improvement occurs when both systems are applied. The insight is that they are discrete systems and need separate management routines to deploy them effectively.
Why is creating a Lean Management System important?
Organisations attempting to implement lean thinking have many struggles. Possibly the most difficult of these is the problem of sustainability. Often, early dramatic results aren’t sustained because improvement efforts aren’t connected to the way in which the organisation is managed day to day. Even when they are, we need to keep highlighting problems to continue to improve.
Creating a lean management system helps us focus on the “vital few” strategic issues. It enables alignment of all teams around customer purpose. A Performance Management System primarily helps us to maintain an expected standard or level of performance for a process or activity aligned with that purpose, telling us whether we are winning or losing.
A lean management system helps line managers manage. When staffs take responsibility for improvement, line managers frequently let them. They have enough to do anyway. However, this frequently causes a problem, in that the “lean team”, “lean programme office” then own the improvement projects. In addition they are responsible for delivering the benefits. Such systems miss the point of what is needed. That is a management system in which everyone solves problems. The way to do this is to create a management system in which line managers are responsible for performance and improvement. Getting the work done and improving, at the same time.
How do you implement a Lean Management System?
The way to implement a lean management system depends upon the situation. There are lots of factors to consider, not least the current situation and the gaps to close. Our research shows that the organisations need to develop their thinking around five key areas. We would go so far as to say these are minimum requirements to establish the system:
- Organisation, structure and skills. The organisation structure must enable leaders to fulfil the role of developing their team. Therefore, assess the ratios of leaders to team members to ensure leaders can fulfil their role sufficiently.
- Defining key processes and KPIs. In order to develop an end-to-end view of how to create value for customers is key to ensure alignment and responsibility.
- Visualisation. So that we create systems that show normal vs abnormal conditions. We need to be able to see if we are winning or losing.
- Problem/Action Management. The system must capture the problems, record the actions and embed PDCA thinking.
- Management routines. Leaders and team members establish management routines. So that we maintain and improve the performance management system at all levels.
What is the Work of Management?
We ask “What is the work to be done?” in our lean transformation framework. What do we need to do to create value for customers? The rationale goes that we should focus the value creating work so it occurs in flow and try to eliminate (or at least minimise) unnecessary but non value creating and non value creating work. Jim Womack asks “What is the management work to be done?” in Gemba Walks (pp112.) Womack argued that managers create value through four types of actions:
- Gaining agreement on the few important things the organisation needs to do.
- Deploying the few important initiatives selected by strategy deployment, solving problems as they arise and evaluating proposals from lower levels of the organisation.
- Stabilising the organisation
- Creating the next generation of lean managers.
For the lean community the challenge is how to move beyond lean as a set of tools or beyond lean as a programme. Embedding lean thinking into the management system is a difficult but obvious next step. It supports a “learn by doing” approach. Acting your way into a new way of thinking, not thinking your way into a new way of acting.
It ties purpose, process and people together. You can learn more about how you can develop your lean management system in our knowledge (level 1) course. We have also developed a webinar to help folk on this journey. If you would like to learn further and have questions please contact us.