I’ve been meaning to write this post for 2 years! It feels good to finally ‘get it out of my head’ and onto the page.
It’s about that lovely ‘Transformation’ word.
Before I go on, I’ll repeat a definition from an earlier post:
“Transformation: In an organisational context, a process of profound and radical change that orients an organisation in a new direction and takes it to an entirely different level of effectiveness….transformation implies a basic change of character and little or no resemblance with the past configuration or structure.” (businessdictionary.com)
To repeat the key phrase: An entirely different level of effectiveness! …and, just in case you missed it, the word is effectiveness, not efficiency.
I’m going to outline 3 levels of (supposed) transformation and I’ll do this by borrowing the bones of an idea from Mike Rother’s excellent ‘Toyota Kata’ book and extend it with a large dose of my own ‘poetic license’.
Level 1 Transformation: ‘On the surface’
So, picture the scene: It’s the late 1970s. Your organisation desperately wants to improve and, on looking around for someone achieving brilliant results, you spot the awesome Toyota (or such like1).
You go on a Toyota factory visit. You are amazed at what you see and excitedly ask them how they do it.
You easily observe (‘on the surface’) lots of obvious methods and tools…and so you grab evidence of how these are carried out – e.g. some template forms, and the instructions that go with them. You also take lots of pictures of their (visual management) walls to show all this working in situ.
You run back home, hand out the methods and tools and mandate that, from now on, this is what we are doing.
You helpfully provide training and (so called) ‘coaching’…and you put in place ‘governance’ to ensure it’s working. You roll it all up together and you give it a funky title…like your Quality Toolbox. Nice.
So what happens?
Well, yep, those tools and methods sure are ‘shiny new’ and easily applied. There’s an initial buzz, probably because of senior management focus…and pressure to prove the comedy ‘Return on Investment’ (ROI) calculation that had to be set out in the short-term thinking ‘will you pay for our factory trip?’ business case.
But the initial effects fall away. Anything achieved was a one-off, or of limited and low level benefit. The changes aren’t sustained – with a slide back to the old state. People start to misuse the tools and methods, and do much damage rather than good. There is a brief and ugly fight with the ‘methods and tools’ compliance police but disillusionment sets in and the early good work becomes discredited and abandoned (just like the last silver bullet…and the one before that…)
Timely reminder: “A fool with a tool is still a fool” (Grady Booch)
Note: This ‘on the surface’ transformation attempt has been likened to organisations going over to Japan in the late 1970s and early 1980s and coming home to fanatically ‘do Total Quality Management’ (TQM)…and then quietly dropping it a few years later. Sure, some organisations sustained it but most didn’t.
Level 2 Transformation: ‘Under the skin’
So it’s now the 1990s. The methods and tools that came out of the initial Toyota factory visit weren’t sustained but the pressure is still on (and mounting) to transform your organisation…and your management can’t help noticing that Toyota are still doing amazing!
“Perhaps we didn’t look hard enough or close enough or long enough…perhaps we should go back and have a look ‘under the skin’.”
…and so you go for another factory visit (once you’ve been given permission following another well written story business case 🙂 ).
This time you take real care – studying ‘at the gemba’ for weeks, asking questions, watching activities, understanding the nature of changes being made to the system before you.
“Eureka! There’s something underneath those methods and tools! We can see that there’s an underlying logic that we missed last time round…oooh, we could codify them into a set of principles!”
And here’s basically what you arrive at:
0. Everything should belong to, or support, a value stream (a horizontal flow from customer need, through to its satisfaction)
…and for each value stream we should:
1. Specify value, where this is through the eyes of the customer; then
2. Identify all the actions performed within the value stream, and expose and remove the obvious waste; then
3. Create flow by understanding and removing the barriers; then
4. Establish pull by producing only what is needed, when requested; and finally
5. The ‘golden nugget’: we should continually strive for perfection because this is a never-ending journey
Wow, that was profound – your factory tour team now need to give it a name!
And so, after a fun focus group, a young member of your team called John2 shouts out “It needs less of everything to create a given amount of value, so let’s call it ‘Lean’.”
Whoop, whoop, he’s only gone and cracked it!
You run back home to tell everyone about the wonders of ‘Lean’. You hand out books, provide training courses, coaching and mentoring and you slot all those wonderful tools and methods nicely into their place…neat…this is going to be great!
So what happens?
Well, everyone absolutely LOVES the principles. They make sooo much sense. They particularly liked playing with Lego in the training sessions to demo flow, pull, kanban and ‘stop the line’ thinking.
But after a while (and some short-term gains) you realise that there’s a huge tension building. No one can make those darn principles work because they continually clash with existing management practises.
Your senior management employ a gaggle of so-called Lean coaches to try to change the people at the bottom whilst they carry on at the top as before!
Your ‘Lean Office’ has become an island of coaches doing great work with the people but unable to turn the tide. Coaching conversations end with responses like:
“Yes, I can see that would be the right thing to do for the value stream…but that’s not what my objectives, performance rating and bonus is based on…or what my manager above me would support…so I’ll stick to soul-destroying fighting within my silo. Sorry about that 😦”
This culminates in huge frustration; a revolving door of broken coaches; and many a good employee finding a better organisation to work for. If you ran an employee survey at this point, the results would make for ugly reading – you’ve created a complete divide between worker reality and management ‘cloud cuckoo land’.
Oh, and that lean word? Well it became capitalised! LEAN…as if it were a thing. You’ve all forgotten that it was just a label thought up by John in a focus group merely to describe what the factory visit team saw.
Pause for reflection: Taiichi Ohno is considered to be the father of the Toyota Production System (TPS) but he didn’t want it to be written down3 (codified) because he wanted it to remain dynamic.
And as for that name:“Ohno did not call his innovation ‘lean’ – he didn’t want to call it anything. He could, perhaps foresee the folly of a label.” (John Seddon)
Caution: …and if you did this ‘under the skin’ (supposed) transformation within a service organisation, you may find (if you properly stood back to look at it!) that you’d totally f@ck$d it up!
Credit: The ‘Level 2’ principles jotted down above are the core of the 1996 book ‘Lean Thinking’ by Womack and Jones….which they wrote following their research in Japan. They explicitly set out 5 principles, with a foundational one implied (hence why I’ve labelled it as ‘principle nought’).
Level 3 Transformation: ‘In the DNA’
…and so to the 2000s. The pressure to change your organisation is relentless – the corporate world is ‘suffering’ from seemingly constant technological disruption…but Toyota continues to be somehow different.
You pluck up the courage and ask for a sabbatical for 6 months – you want to find the meaning of life…well, perhaps not that deep…but you sure as hell want to know what Toyota have got that you don’t…and to work this out, you are going to have to go in deep – to their DNA.
Toyota are happy to see you again. But, rather than repeating what you did on the last two trips, you come straight out with it:
“Okay, you’ve shown me your tools and methods…you’ve let me uncover your principles…and I know that these aren’t the answer! What are you hiding from me?! Come on, I get it, it’s a competitive world out there but PLEASE let me in on your secret.”
The Toyota managers are perplexed. They don’t know what else they can do. They are adamant that they aren’t hiding anything from you.
…and so, rather than go straight back home empty handed, you ask if you can work with Toyota to experience what day-to-day work is actually like. They humbly agree to your request.
And six months later your mind has been totally blown!
You really get it….no, REALLY GET IT!
You couldn’t see the wood for the trees but now it’s as obvious as can be.
It’s all about the environment created by management’s actions, which come from their beliefs and behaviours about human beings: about society, about customers…and, most profoundly, about employees.
This is invisible on a factory visit! But it’s still there. It’s simply ‘in the DNA’.
Sure, you could provide a list of attributes as to what this looks like…but management can’t just do them, they have to believe in them – in fact, ‘be’ them!
Further, there’s nothing to be ‘implemented’ because it can’t be!
Everything flows from management’s beliefs and behaviours: It’s from these that Toyota creates new principles, methods and tools all the time…and throws out old ones that are no longer appropriate. Their systems thinking and human thinking is solid and profound, whilst their method is dynamic and agile.
…and the realisation sinks in: No wonder Toyota are happy to open their door to anyone. The thing that makes them great can’t be copied. It has to be lived and breathed…and nurtured from the shop floor all the way up. Oh sh1t!
…and so to your new headache: you totally ‘get it’ but how on earth do you change your organisational system – now that is THE nut to crack. That would be transformational!
Reflection time:
So ‘On the surface’, ‘Under the skin’ or ‘In the DNA’: What level of transformation are you playing at?
…if you are at level 1 or 2 then it’s not actually transformation.
…if you are truly at level 3, then here’s the final mind blowing bit – it is self-sustaining.
To close: I have been asking myself a HUGE question for a fair while now: Can management’s beliefs and behaviours change within a large floating (i.e. short-term thinking) shareholder owned organisation. I’m nearly there with writing down my thoughts. Watch this space…
Footnotes:
1. Just Toyota? I use Toyota in this story since everyone knows who they are…and visits to their factories is precisely what happened regularly over the last several decades. But it isn’t just Toyota.
Your own ‘Toyota’ factory visit could be to another great organisation…and it needn’t be a factory making products – it could be a service organisation. Handelsbanken would be a great financial services example.
Though beware, there aren’t that many ‘true Toyotas’ out there. And perhaps none that have sustained it for so long.
2. ‘John’: He’s even called John in the true story – John Krafcik, a young researcher on Womack’s MIT research team…and those were his words back in 1987 (as recalled by Womack) to give birth to the Lean label.
3. Writing it down: Ohno finally relented when he retired in 1978 and wrote a book on TPS.
4. Clarification: I think a great deal of Lean Thinking, but not a lot about ‘LEAN’ – the implementation movement. I respect Womack and Jones, and their writings…but I note that my favourite Womack book is ‘Gemba Walks’ written about a decade after ‘Lean Thinking’ in which he humbly reflects that it was about far more than the tools and the principles. It was really about the management system (or, in my words, the DNA).
Squire to the Giants 
Well squire what can one say to this!
I await your next observation
on the possibility
of transformation
in a large
shareholder owned organisation!
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Brilliant………..erudite, articulate and concise. Keep up the excellent work!!
I was on the UK Exec of a large UK financial services business for a couple of years and at one of the interminable monthly meeting the discussion was almost entirely about the numbers and why they were not in line with the budget or expectations. Are they ever?
The MD posed the question to the assembled team “do we have a people problem?”. The clear inference was that the unsatisfactory financial performance was all the fault of the people at the coalface and their inability to do what they were told. Isn’t it always?
My response to the question was “yes we do have a people problem but it’s inside the room not outside”.
There were blank looks, gasps and the odd audible muttering of career damage. Not one of my colleagues could see we were the problem and it was our behaviour that was causing the numbers to be below where we wanted them to be. Their answer was to resort to the usual C&C stuff of more monitoring, performance management, threats of bonus removal, etc. Don’t they always?
The breathtaking arrogance of senior management never ceases to amaze me. Sadly it’s also why the “DNA Transformation” you correctly highlight as being the fundamental that needs to get done to change corporate performance never (or seldom) happens.
Ah well who knows perhaps one day I’ll waken up and find the world has learned it’s lesson and is moving in the right direction but somehow I think that’s a rather long shot.
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Kingseat, I was glad to read your comment. Its comforting (but at the same time sad) to know that this same issue is so prevalent. This very thing is at my company. It was at my last company also. I feel ya. I really do. We change agents need to keep at it, though, trying to change the DNA.
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Excellent read, again. Keep ’em coming. I love your work. 🙂
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Great perspective and fun read. I enjoy your blog, when I remember to read it. 🙂 I look forward to your writings on the possibility of transformation in a large shareholder-owned org!
Keying in on one of your observations above:
“…but that’s not what my objectives, performance rating and bonus is based on…or what my manager above me would support…” Seems to me that this is at the core of the problem and until a company, regardless of their size and ownership, aligns their incentive and reward models, the DNA has no stimulus to evolve.
Have you read any of Ptak’s and Smith’s work, most recently their book “Demand-Driven Material Requirements Planning”? If not, I highly recommend it and would be interested in your perspective on how this BOK may help drive level 3 transformation.
Cheers,
Kevin M. Reid
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Hi Kevin
I note that you refer to a company aligning their incentive and reward models.
Whilst not wanting to presume exactly what you mean when using these word (which mean different things to different people 🙂 ) I should note that I do not agree with the ideology of ‘do this to get that’ contingent rewards (usually referred to as incentives) and have written a fair bit about this.
I am a big fan of Alfie Kohn’s research review conclusions that we should pay people well, and fairly and then take the topic of money off the table so that we can all get on to delivering against customer purpose.
I also favour the idea of people sharing in the success of their organisation…where this is very different to contingent rewards. If you haven’t read it then here’s an earlier post that explains:
https://squiretothegiants.wordpress.com/2016/05/04/profit-sharing-vs-incentives/
Cheers, and thanks for adding your comment 🙂
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People work primarily for one reason: Make Money. We make money because it’s the currency in trade that enables us each to seek and enjoy the quality of life we value. Some people value their time with family, communities, or just for themselves, more than a bigger pile of money.
Companies, especially shareholder-owned ones, exist to achieve the same goal. In order to Make Money, a company must Provide Value to the market, supply chain, and employees. Companies can attract better quality people with the right compensation and benefits options. Therefore, the balance of Money and Value is what’s in play.
The wrong metrics in one area of a company can create a bullwhip effect throughout the business that has many negative consequences. And with metrics come incentives to those resources involved with protecting and delivering on those metrics. Eventually, the wrong metrics and the exacerbation from incentives forces the financial guidance to focus in another area, turning the bullwhip elsewhere. Resolving the wrong metrics means altering how the business has operated for years, decades, even centuries, so it’s in their DNA, and therefore very difficult to do.
Standing on the shoulders of giants like Henry Ford, Frederick Taylor, and F. Donaldson Brown, we can see that it’s about flow through a business. As you so aptly illustrated in your blog, Taiichi Ohno’s Toyota Productions System was never about efficiencies, especially local ones, it was about effectiveness, and most importantly, effectiveness in flow.
Thus, if you have the right metrics focused on flow, then you have the right incentives to protect it.
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Hi Kevin. Thanks for adding your further thoughts.
Here’s some random thoughts that occur to me from reading them:
– Money: I’ve got nothing against money as a concept but money and incentives are two very different things. If I was to draw a Venn diagram (harking back to school boys maths lessons here!) then there would be two circles with an overlap. Money is about far more than incentives and incentives can be held out in far more ways than just money. I wrote a post about this a couple of years ago: https://squiretothegiants.wordpress.com/2014/12/03/money-as-pay/
– Measurement and incentives (in a ‘do this to get that’ way) do not have to belong together, and if you read the excellently researched books by Alfie Kohn (‘Punished by Rewards’) and more recently by Dan Pink (‘Drive: the surprising truth about what motivates us’) then you may see incentives in a totally different light….but this really goes back to how one human thinks about another – and McGregor dealt with this nicely back in the 1960s: https://squiretothegiants.wordpress.com/2015/02/11/oh-no-not-that-old-theory/
– ‘Wrong metrics’: This is a major subject area but is often couched in the language of ‘improving the existing way of doing things’ rather than realising that the existing way is the underlying problem. I’ve written a fair bit about systems, value streams, their purpose, variation within and capability (rather than activity or financial) measurement. A past post perhaps of most relevance here would be: https://squiretothegiants.wordpress.com/2015/09/06/capability-what/
…so, yes, ‘the right measures, measured right’ is hugely important…and this requires totally different thinking about people. I find Inspector Guilfolyle’s blog most useful in explaining measurement: https://inspguilfoyle.wordpress.com/
– But all of the above is symptomatic from management’s current beliefs and behaviours. A study of Deming’s ‘Theory of Profound Knowledge’ – about systems, variation, knowledge and psychology – could enable a paradigm shift;
– Flow: yes, totally comfortable with that word. Incentives to protect it? – no, I’m not with that line of thinking. Alfie Kohn would likely refer to this as ‘treating people as pets’ rather than human beings. Again, I wholeheartedly recommend his book on rewards;
– Regarding Henry Ford: I find it of note (from reading his 1926 ‘Today and Tomorrow’) that he got rid of piece work (the historic method of incentives) and put his men on a good steady wage. He also introduced profit sharing….and he had some very interesting things to say about Money (he referred to two types – Dead and Live – I’m writing about this soon).
– Regarding Frederick Taylor: I found reading his 1911 ‘Principles of Scientific Management’ most interesting. He was clearly a man of his time and did not have the benefit of the decades of psychological research performed since. His thinking fitted nicely into the idea of an organisation as a deterministic system, with worker and manager being two separate classes of people: https://squiretothegiants.wordpress.com/2016/07/11/oh-so-thats-why-command-and-control-doesnt-work-very-well/
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Kelvin
Ah huh you mention level 3
That triggers in my memory
The writings of James Clawson’s level 3 leadership
and Doug Newburg’s resonance performance model
that both what I want and how i want to feel
are what makes me real
to be
free
Ross
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I kind of think you should think about switching Behaviour and Beliefs. My understanding is that cognitive behavioural therapy works on that principal.
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Hi Nick
Interesting observation
Behaviours can be observed by others
Thoughts can be observed by self but not by others
Beliefs are not normally observed by self and definitely not by others.
Now how does one acquire one’s beliefs? How does one transform one’s beliefs? What about so-called “shared beliefs”?
That is a very interesting story and it does go beyond cognitive behavioural therapy (CBT)
Acceptance commitment therapy and dialectical behaviour therapy and Arts Based Therapy are some other candidates.
The knave does however “writes for one’s times” which is why I subscribe and at times imbibe!
Go well
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Stuck in the midst of a Level 2 ‘transformation.’ When I talk about Level 3 concepts with leadership I might as well be speaking a long dead language. It is both entertaining and defeating to have conversations with leaders to confirm their C&C beliefs. The saddest thing is they can’t even hear it when comes out of their mouths.
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Yep, Level 2 is a tricky place to be.
…and as to whether they will listen, or hear you even if they try? Well, this is probably why I wrote the recent post titled ‘People don’t change their mind’. Normative change beat rational attempts hands down….but even then they may be ‘paid to not understand’.
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Money is a hygiene factor, perceived if not enough as a dissatisfier as per Herzberg
How much is enough?
Well that depends on the situation
As for metrics I have found that direct experience answers the question for me
For is not what is to be measured the answer to the question asked?
So if there is a problem then go to gemba first and look but make sure you see the whole picture and not just a part of the elephant!
https://inquiry111westminster.wikispaces.com/Blind+men+and+an+elephant
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Whoah, there’s dangerous levels of insight here. Goodness only knows what your conclusions about changing the DNA of shareholder owned businesses will be.
For my part, I’m on my third shareholder owned business. In my first I ventured through levels 1 and 2. Fully believing in it, until the wheels started to come off. I then left in despair.
My next organisation wasn’t even at level 1. I thought this was good, but in my time there I fully crossed the Rubicon and saw what can never be unseen. I was starting to understand level 3. After a few years of swimming against the tide I moved on.
Now in my third shareholder owned business. I’ve entered it at a time of transformation (e.g. new board members, job titles and redundancies). I’ve seen it all before, so in a way it’s water off a ducks back. Fortunately for me, I’m running a small satellite of the business. I’m bound by the same de-facto measures and control that pull away from purpose, but I’m perhaps far enough removed (both geographically and in terms of service offering) that I can play lip service to the nonsense, whilst leading my team toward a better way, through my beliefs and behaviors.
I hope so and I look forward to your next blog.
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Excellent post and a great analogy. I’ve been thinking along these lines lately. I’ve started saying we aren’t going to get better unless we change our paradigms–i.e. the DNA. The tools and techniques will change based on our circumstances. I’ve often wondered if part of the problem is because folks are so under the gun and so fearful that we can only focus on the short term and its why we so quickly look for the tools–the ‘how’ instead of looking at the ‘what’ and ‘why.’ People are pressed for time and want results NOW. Changing DNA takes serious reflection, a lot of study, and a lot of questioning. When folks’ backs are against the wall, they don’t believe they have time for those things and so the band aids are applied. They then wonder why the same issues crop up again a little further down the road.
This post has also made me question the belief that if you change people’s tools, you change people’s minds.
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