The element of 'Defective Product' is an interesting approach to viewing Healthcare and is an eye opener in terms of what it means for patients, as it refers to a 3-4% Defect rate. This means that for every 100 patient encounters there were 3-4 defects, which are everything from no record of an appointment all the way through to an avoidable death.
As Dr. Kaplin stated in his address of the St. Luke's Health System Summit in 2013:
"...if the aviation industry had this sort of defect rate, 'planes would fall out of the sky every day; if Flat Screen TVs had these kinds of Defect rates we wouldn't buy them..."
Video: Applying the Toyota Production System to Medicine
In the year 2000, the Board asked Dr. Kaplin and his Management Team: "Who is your Customer?", to which they responded (of course) "The Patient". However, the Board retorted that if that was the case, things wouldn't look like they did:
By facing the reality of the situation they tackled some of the paradigms prevalent in the Healthcare industry and in the video (just short of 15 minutes but well worth your time investment) Dr. Kaplin also talks about a preventable death that had a major impact on their Lean Transformation, even though they were already 3 years into it, which resulted in a single organisational goal for 2004-2006 of protecting patients from avoidable harm.
What I really like about the approach that the team at Virginia Mason have taken is that they have not tried to 'reinvent' Lean for their industry, accepting that they do 'make' things and even calling their Lean System the Virginia Mason Production System (VMPS). This is a mature approach and, in my opinion, a critical factor of the mindset required to be successful in a Lean Transformation.
Virginia Mason have undertaken detailed Value Stream Mapping of their Current States (finding typically 90%+ of the time being non-Value Added) to enable the significant improvements that they've made in their performance and they take a granular approach. However, as Dr. Kaplin states in the video:
"As Leaders there are technical changes, Lean, there's the Toolbox, it's the improvement method ... but you need a critical mass to feel urgency, you need to have visible and committed Leadership; not advocacy leadership; I was a great advocate Leader ... my job was to get all the resources from our department and keep administration off of our backs ... but that's not what we need now; we need leaders who are change sponsors."
As a result of the 14 years of Lean Transformation, they have made a fantastic leap forward in their performance and care for their Patients and in 2010 were awarded the recognition of 'Top Hospital of the Decade' by the Leapfrog Group and have since featured regularly in the 'Top 100 Hospitals in America' list.
The Cultural change in their organisation is tangible and is led from the top, with another great quote from Kaplin demonstrating this:
"... we've got a $2.7 Trillion Industry, we've got enough Money in Healthcare ... We need to change our mindset from Scarcity to one of Abundance. It's what we do with our resources that count."
Virginia Mason have demonstrated that with true Lean Leadership, as I wrote about in my articles 'The Meaning of Lean' and '5X Why most Leaders aren't good enough', a Lean Transformation, linked to the Business Strategy, can Transform the performance of your Business.
Whilst 70-90% of all Lean Transformations fail (depending upon which study you read) it isn't really a gamble but a choice, as the reason that they fail is that the Leadership of the organisation effectively choose to ignore the Critical Success Factors (CSFs) for a successful transformation.
As I wrote in one of my earlier posts, "The Meaning of Lean (the Universe and Everything)", LEAN may be thought of as an Acronym for Leadership, Excellence, Analysis and No (saying No) and needs to be part of an integral, People centric, Business Strategy.
Doing this requires a complete transformation of thinking in the Leadership of the Business and only when this is achieved will the results be sustained over a period of many years. There are no 'half-measures' or out-sourcing to consultants as a surrogate for this; only a clear, focussed vision and years of hard, disciplined work.
Art Byrne in his book, the Lean Turnaround, explained that Lean Thinking is not a Project or Initiative but a way of running your Business and, as he states:
"Using Lean to turn your company around has a very simple focus. You want to improve all your processes so that you vastly improve the way value is added in your company. Doing so will increase both your market share and your enterprise value. This can occur only if you understand that Lean has to be your strategy - the foundational core of everything you do - if you are to be successful. Lean is not a 'Manufacturing thing.' ..."
In support of this take a look at figure 1, which is the Stock performance of Toyota over 20 years (1995-2015), compared with that of Honda, GM and Ford. What you will see is that both Toyota and Honda have significantly outperformed both GM and Ford, with Honda arguably having turned Master, having learned a lot of what it has applied from Toyota.
Figure 1: Toyota Motor Corporation Stock performance over 20 Years
Both GM and Ford have had access to the Lean Business Systems of Toyota and Honda for many years and have benefited from employing many of their best engineers, Lean Gurus and utilising Consultants with the 'Toyota Pedigree'. They have even shared Manufacturing sites with them and have rubbed shoulders at the level of the top leadership. Nevertheless, they have been unable to truly embed Lean as the enabler of their strategy and have instead utilised it as a cost reduction / efficiency approach.
However, a few Companies have been able to truly embrace Lean Thinking as their Business Strategy and one of those is the Danaher Corporation, whose Stock performance over the last 20 Years plus has been nothing short of phenomenal (see figure 2).
Figure 2: Danaher Corporation Stock performance over 20 Years
This 'Better than Buffet' stock performance has been achieved through the disciplined adherence to the Danaher Business System (DBS) and is even more remarkable given that Danaher are an acquisitive corporation and therefore have had to integrate multiple businesses and new Leaders into their way of working.
So, if you really want to deliver exceptional results for your Customers, Employees and Society, place a bet on Lean Thinking as your Business Strategy and choose to win. As Art Byrne said: "Don't just do Lean; Be Lean".
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Once we have a question like this, we can start to think about an answer and one of the first set of conventional answers that it should dispel are those which are tool focussed. These are the ones that seem to miss the whole point of the question as, whilst we of course need to use the appropriate tools if we are to apply Lean Thinking in our Organisation and we need to know how to use them effectively, if we focus on the tools, it is like postulating that World Class Tennis players are created by providing them with the best Rackets.
An answer that I find much more compelling is one that is Principle Driven and this is what we tend to find alive in those organisations, such as (amongst others) Toyota (the Toyota Way) and Danaher (Danaher Business System), that have made Lean Thinking a fundament of their success. This approach was codified by Womack and Jones in their book "Lean Thinking" and one approach is taught and modelled by the Shingo Institute in their Shingo Model.
However, I'm going to attempt to answer the question myself and, at the same time, provide another proposal for LEAN as an acronym. So instead of the oft used 'Tongue in Cheek': "Less Employees Are Needed", I am going to propose:
LEAN = Leadership, Excellence, Analysis and No
1. Leadership: In Lean Thinking this is not just for those people provided with a leadership job title but the enablement of everyone within the organisation to take leadership in their own domain. By setting the appropriate boundary conditions, taking a People focussed approach to our business processes and ensuring that everyone is focussed on what the Customer / Consumer perceives as value, we can ensure that daily management assures continuous flow (of products, information, knowledge and services) throughout the Value Stream.
2. Excellence: The pursuit of excellence is absolutely core to Lean Thinking and its continuous pursuit is enabled through some of the key tenets of a Lean Business System. Utilising small batch sizes, continuous flow, built-in-quality and pull systems (not only for products but also information, knowledge and services), based upon the customer demand, daily management drives rapid problem solving and Kaizen. Team members are encouraged to constantly experiment with improvements to the system and through go-to-gemba (go to where the value is added) Leaders are able to coach and act as teachers.
3. Analysis: Lean Thinking has its foundation built on fact based decision making, through the application of A3 Thinking and a short-interval control approach, whereby people are rapidly involved in problem solving, using the appropriate tools (including both the Lean and Six Sigma toolkit), to find the root cause and implement countermeasures. However, experimentation and learning is a major element and therefore 'at-the-gemba' problem solving with 'cardboard engineering' experimentation is common and this approach is not just for the shop-floor but is applicable all the way to the board-room.
4. No: In my experience the 'secret formula' of Lean Thinking is Hoshin Kanri (or Policy Deployment) and the one area that most organisations struggle to apply. Having the courage to say NO to the multitude of opportunities that an organisation has and to have the 'laser-like' focus required to choose only those few things that will truly provide the break-through results is extremely difficult and only a few organisations have the level of discipline and stamina required to truly do this. Without this ability to say no, most businesses tend to overload their people and fail to execute effectively.
Those organisations that have embedded Lean Thinking into their Company Culture have demonstrated superior performance over significant periods of time and prove that Lean is, above everything, about integrating a Principle driven approach to an Organisation's Management Philosophy.
Did I ask the appropriate question and is my answer to that question the right one? I don't know for sure but hopefully we won't need to build a special computer the size of a small planet in order to determine it and with a bit of luck the answer won't be 42!
In my experience it is therefore incumbent upon an organisation to have an holistic strategy for their Lean Transformation, with a clear vision of where they want to get to, described in hard and soft KPIs, and a plan of how to get there. From this plan, capability and competence gaps can be identified and a combination of internal development, external hires (perhaps some ex-Toyota, Danaher, Honeywell, etc. employees) and consultancy support can be used to close those gaps.
Just don't think that by hiring Lewis Hamilton you can build a F1 winning team...
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