Enabling Enterprise Excellence
Lean Enterprise Thinking and
Implementation
MICI China Lean Summit
Professor Earll Murman
November 4, 2010
Lean Advancement Initiative (LAI)
•
•
•
•
•
An Academic – Industry – Government research
consortium hosted by MIT
Founded in 1993 as the Lean Aircraft Initiative
Became the Lean Aerospace Initiative in 1998
LAI Educational Network (EdNet) founded in 2002
Became the Lean Advancement Initiative in 2007
LAI enables the focused and accelerated
transformation of complex enterprises through
collaborative stakeholder engagement in developing
and institutionalizing principles,
principles processes,
processes
behaviors, and tools for enterprise excellence.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 2
LAI Members Share a Goal:
Enterprise Excellence
AMCOM
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 3
LAI Educational Network
Research
results and
practitioner
knowledge
Curriculum
Materials
I t
Integrating
ti llean iinto
t education
d
ti
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 4
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 5
LAI Directors
Dr. Deborah
Nightingale
Dr. John Carroll
Morris A. Adelman
Professor of
Management,
Professor of
Behavioral and Policy
Sciences and
Engineering Systems
Professor
P
f
off the
th
Practice of
Aeronautics and
Astronautics and
Engineering
Systems
Co – Directors
Richard
Lewis II
Research
Affiliate,
COO Rolls
Royce
Indianapolis,
Retired
Dr. Earll Murman
Ford Professor of
Engineering Emeritus
Emeritus,
Aeronautic and
Astronautics and
Engineering Systems
Executive
Director
EdNet
Director
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 6
LAI Researchers
Dr. Kirkor
Bozdogan
Dr. Wiljena
J Glover
J.
D G
Dr.
George
Roth
Dr. C. Robert
Kenley
Prof.
P
f W
Warren
Seering
Dr. Josef
Oehman
Dr. J
D
Jayakanth
k th
Srinivasan
Dr. Eric
Rebentisch
Dr. Ricardo
Dr
Valerdi
Dr. Donna
Rh d
Rhodes
Prof. Joseph
Prof
Sussman
Together with
10 US Air Force & Army Fellows
16 Research Assistants
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 7
LAI Staff
Juliet Perdichizzi
Operations and
g
Events Mgr.
J. Thomas Shields
Program Mgr.
Dr. Hugh McManus
EdNet Associate Dir.
Nicolene Hengen
Membership and
Communications Mgr.
Terry Bryan
Transformation Dir.
Dr. Jacqueline Candido
EdNet Associate Dir.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 8
Lean Produces Results in
Aerospace
In 1992 US Air Force asked:
Can the concepts,
principles, and practices
of the Toyota Production
System be applied to the
military aircraft industry?
In 2002 LAI responded:
YES
…if Lean is focused on
enterprise
i value
l creation
i
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 9
Lean Enterprise Value
2002
2005
2008
Fundamental Principles applicable to many
complex enterprises beyond aerospace; e
e.g
g
automotive, healthcare, government, services.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 10
What Is an Enterprise?
Customer / End User
Product Support
Product
Development
Finance, H/R,
Legal, etc...
Manufacturing
Operations
Supplier Network
One or more
organizations
having related
activities, unified
operation, and a
common
business purpose
Source: Black’s Law Dictionary, 1999
An enterprise may be a firm, large division of a
firm, government agency, a multi-firm program, etc.
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 1
What Are the Boundaries of an
Enterprise?
•
•
•
The enterprise
b
boundaries
d i need
d tto b
be
identified: Definition is
contextual
Core enterprise:
Entities tightly integrated
through direct or
partnering agreements
Extended
E
t d d enterprise:
t
i
From customer’s
customer to supplier’s
supplier s
supplier
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 12
Who are the Stakeholders ?
Customers End Users
Shareholders
Corporate
Leadership
Employees
ENTERPRISE
Society
Partners
Suppliers
Unions
Stakeholder:
Any group or
i di id l who
individual
h
can affect or is
affected byy the
achievements
of the
organization
s
organization’s
objective*
* Source: Freeman, Strategic
g Management:
g
A
Stakeholder Perspective, Pittman, 1984
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 13
Stakeholder Value
“Value - how various stakeholders find particular
worth, utility,
y benefit, or reward in exchange
g for
their respective contributions to the enterprise.”
Value Expected
from the
Enterprise
p
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
Value
Contributed to
the Enterprise
p
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 14
What is A Lean Enterprise?
“A lean enterprise is an integrated entity
that efficiently creates value for its multiple
stakeholders by employing lean principles
and practices.”
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 15
Value Creation Framework
Find
stakeholder
value
Agree to and
develop the
approach
Deliver
on the
promise
Value
Identification
Value
Proposition
Value
Delivery
Dynamic and
iterative
Do the Right Job & Do the Job Right
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 16
Lean Applies to All Enterprise Processes
Life Cycle Processes
 Business acquisition & program management
 Requirements definition
p
development
p
 Product/process
 Supply chain management
 Production
 Distribution and support
$
Enabling Infrastructure Processes
Lean Finance
applies to production and all
Fi
 Information
technology
other
life cycle
processes that
 Human resources
deliver
value
to the customer and
 Quality
assurance
revenue
Facilities and
toservices
the enterprise
 Environment, health, and safety
Enterprise Leadership Processes
Lean also applies to enabling infrastructure and enterprise
leadership processes required to deliver program/product value
Applying
pp y g Lean Thinking
g to only
y some enterprise
p
processes
p
leads
to Islands of Excellence – not Lean Enterprise Value
Source: Murman, E., et al., Lean Enterprise Value: Insights
from MIT’s Lean Aerospace Initiative, Palgrave, 2002.
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 17
Types of Enterprise
Transformation Failure
Failure Type
Only in my backyard
Activity
Low-hanging fruit
Pet project
New leadership
Leaders who don’t lead
Hi th
Hire
the ttransformers
f
Flavor-of-the-month
Results from ...
Undertaking only local projects, with no consideration
for their impact across the enterprise
Feeling the need to “do something” and
measuring/valuing activity rather than progress
Focusing efforts on whatever is the easiest problem
to address
Working on whatever a leader or leaders want,
whether it is the right thing or addresses root issues
Heading down the path set by a new leader with no
regard for where the organization is/ has been going
Delegating all transformation work to underlings, with
leaders taking no part in the efforts
B i i iin outsiders
Bringing
t id
tto d
develop
l and
d iimplement
l
t
transformation, who leave behind no plan
Undertaking transformation efforts that shift from one
methodology to another, again and again
Transformation Principles and Tools are Needed!
Source: D. Nightingale and J. Srinivasan, MIT 2010
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 18
Lean Enterprise Transformation
Processes and Tools
Transformation Issue
Enterprise Tool
What are the key
principles of lean
enterprise thinking?
7 Principles of
Enterprise
Transformation
How do I transform
to a lean enterprise?
Enterprise
p
Transformation
Roadmap
How do I assess
my progress?
Source: D. Nightingale and J. Srinivasan, MIT 2009
Lean Enterprise Self
Assessment Tool
(LESAT)
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 19
7 Principles of Enterprise
Transformation
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
5.
6.
7.
Focus
on enterprise
effectiveness before
efficiency.
Address
internal and external
enterprise
interdependencies.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
learning.
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 20
1 – Holistic Approach
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
5.
6.
7.
Focus
on enterprise
effectiveness before
efficiency.
Address
internal and external
enterprise
interdependencies.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
learning.
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 21
2 – Leadership Commitment
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
Productivity Index
x
1.
4.
5.
Focus
on enterprise
effectiveness before
efficiency.
Address
internal and external
enterprise
interdependencies.
LAI Aerospace
Organizations
6.
7.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
learning.
Leadership Index
Source: D. Tonaszuck, MIT Master’s Thesis, January 2000
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 22
3 – Stakeholder Value
Propositions
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
5.
Focus
Address
on enterprise
internal and external
Value
Expected
effectiveness before
enterprise
from the
efficiency.
interdependencies.
Enterprise
p
Source: D. Nightingale and J. Srinivasan, MIT 2009
6.
7.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
Value
learning.
Contributed to
the Enterprise
p
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 23
4 – Effectiveness Before
Efficiency
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
Focus
on enterprise
effectiveness before
efficiency.
Do5.the Right Job
6.
Address
internal and external
enterprise
interdependencies.
Ensure
stability and flow
within and across the
enterprise.
THEN
7.
Emphasize
organizational
learning.
Do the Job Right
g
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 24
5 – Enterprise Dependencies
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
5.
6.
7.
Focus
on enterprise
effectiveness before
efficiency.
Address
internal and external
enterprise
interdependencies.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
learning.
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 25
6 – Stability and Flow
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors.
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
www.southwest.com
4.
Focus
on enterprise
effectiveness before
efficiency.
5.
6.
7.
Address
internal and external
enterprise
interdependencies.
Ensure
stability and flow
within and across the
enterprise.
Emphasize
organizational
learning.
Source: Airline Monitor
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 26
7 Organizational Learning
Rockwell Collins Example
• E
Each
l
averages 40 h
hours
1.h employee
2.
3.
ofAdopt
education
per
year
a
Secure
leadership
Identify relevant
holistic approach
• to
tFocusing
enterprise
t
i
transformation.
commitment to drive
stakeholders
on 21st-century-style
and
d iinstitutionalize
tit ti
li
and
dd
determine
t
i th
their
i
value propositions.
enterprise behaviors
.
by tailoring
education
to
learning
fit the individual
• Apprentice like environment
4. through online
5. mentoring 6.
Focus
Address
Ensure
on enterprise
internal and external
stability and flow
•
Knowledge
management
data
effectiveness before
enterprise
within and
across the
efficiency. base, interdependencies.
enterprise.
with expertise location
7.
Emphasize
organizational
learning.
• Fluid communities of practice
Source: D. Nightingale and J. Srinivasan, MIT 2009
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 27
Rockwell Collins Overview
•
•
•
•
•
•
Leading provider of commercial and
military avionics systems and
information technology
Founded in 1933 as Collins Radio
Company
Acquired by Rockwell International
in 1973
Spun-off in 2001 as an independent,
independent
publicly traded company
Today, more than 20,000 employees
at over
o er 60 locations in 27 countries
co ntries
1998 - “Lean Electronics”
launched by CEO Clay Jones
as RC’s operating philosophy
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 28
Lean Electronics: Our
Operating
p
g Philosophy
p y
Results In the Office:
•
•
•
•
Results In the Factory:
Reduced Publishing Cycle Time 72%
70% Work In-Process Reduction
38% Productivity Improvement
77% Manuals Inventory Reduction
Source: Rockwell Collins.
•
•
•
25% Improvement in Productivity
46% Reduction in Inventory
Cycle Time Reductions of up to 75%
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 29
Rockwell Financial Performance
Notes (1) Additional factors beyond Lean Electronics contribute to Rockwell Collins
superior sector performance
(2) Financial performance for firms can include non-aerospace business units
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 30
Lean Enterprise Transformation Roadmap
STRATEGIC
CYCLE
Determine
Strategic Imperative
Strategic Implications of Transformation
Nurture Transformation &
Embed Enterprise Thinking
Pursue &
Sustain
Enterprise
Transformatio
n
Long-Term
Corrective
Action
Engage Leadership in
Transformation
PLANNING CYCLE
A Committed Leadership Team
Understand
Current State
Implementation Results
Capabilities & Deficiencies Identified
Implement & Coordinate
Transformation Plan
Short-Term
Corrective
Action
Envision & Design
Future Enterprise
EXECUTION CYCLE
Enterprise Vision
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Alignment
Requirements
Identified
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 31
Lean Enterprise Transformation Roadmap
STRATEGIC
CYCLE
Determine
Strategic Imperative
Strategic Implications of Transformation
Pursue &
Sustain
Enterprise
Transformatio
n
Engage Leadership in
Transformation
PLANNING CYCLE
• Articulate the Business Case
forLeadership Team
A Committed
Nurture Transformation
&
Transformation
and convey urgency
Long-Term
Corrective
Action
Embed Enterprise Thinking
• Focus on Stakeholder
Understand
ValueCurrent State
Implementation Results
Capabilities & Deficiencies Identified
• Leverage
g Transformation Gains
Implement & Coordinate
Pursue
Transformation
Plan &
Envision & Design
Sustain
Enterprise
Short-Term
Future Enterprise
Corrective
Transformation
Action
EXECUTION CYCLE
Enterprise Vision
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Alignment
Requirements
Identified
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 32
Lean Enterprise Transformation Roadmap
STRATEGIC
CYCLE
Determine
Strategic Imperative
Strategic Implications of Transformation
Pursue &
Sustain
Enterprise
Transformatio
n
Engage Leadership in
Transformation
• Cultivate Enterprise Thinking
Long-Term
Corrective
Action
Nurture Transformation &
• Obtain
Management
g
Embed
Enterprise
Thinking
Buy-In
y
PLANNING CYCLE
A Committed Leadership Team
Understand
Current State
• Establish
Executive
Transformation
Council
Implementation Results
& Deficiencies Identified
A Committed LeadershipCapabilities
Team
Implement & Coordinate
Transformation Plan
Short-Term
Corrective
Action
Envision & Design
Future Enterprise
EXECUTION CYCLE
Enterprise Vision
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Alignment
Requirements
Identified
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 33
Lean Enterprise Transformation Roadmap
Pursue &
Sustain
Enterprise
Transformatio
n
• Perform Determine
Stakeholder
Strategic Imperative
Analysis
STRATEGIC
CYCLE
Implications ofProcesses
Transformation
•Strategic
Analyze
&Long-Term
Corrective
Interactions
Action
Nurture Transformation &
Embed Enterprise Thinking
• P
Perform
f
E
Enterprise
t
i
Maturity
Assessment
Implementation
Results
•Implement
A
Assess
Current
t
&C
Coordinate
Short-Term
Transformation Plan
Performance
Corrective
Action
Measurement System
Engage Leadership in
Transformation
PLANNING CYCLE
A Committed Leadership Team
Understand
Current State
Capabilities & Deficiencies Identified
Envision & Design
Future Enterprise
EXECUTION CYCLE
Transformation Plan and
Capabilities
Create
Deficiencies
Identified
Alignment
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Requirements
Identified
Enterprise Vision
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 34
Lean Enterprise Transformation Roadmap
Determine
Create
Vision
of
Strategic
Imperative
STRATEGIC
CYCLE
•
Future State
Strategic Implications of Transformation
Pursue &
Sustain
Enterprise
Transformatio
n
Long-Term
Corrective
Action
• Perform Gap Analysis
Nurture Transformation &
Between
et ee Thinking
Cu
Current
e ta
and
d
Embed
Enterprise
Future States
Engage Leadership in
Transformation
PLANNING CYCLE
A Committed Leadership Team
Understand
Current State
Implementation Results
• Architect “To-Be”
To-Be
Implement & Coordinate
Enterprise Value Short-Term
Transformation Plan
Corrective
Stream
Action
Capabilities & Deficiencies Identified
Envision & Design
Future Enterprise
EXECUTION CYCLE
Enterprise
Vision
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Alignment
Requirements
Identified
Enterprise Vision
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 35
Lean Enterprise Transformation Roadmap
Pursue &
Sustain
Enterprise
Transformatio
n
Determine
Strategic Imperative
Reconcile
Systems,
STRATEGIC
CYCLE
•
Policies,, & Vision
Strategic Implications of Transformation
Long-Term
Corrective
Action
• Align Performance
Nurture Transformation &
Measurement
System
Embed
Enterprise Thinking
• Align
Incentives
Implementation
Results
PLANNING CYCLE
A Committed Leadership Team
Understand
Current State
Capabilities & Deficiencies Identified
• Empower
E
Change
Ch
Implement & Coordinate
Agents Plan
Transformation
Engage Leadership in
Transformation
Short-Term
Corrective
Action
Alignmentt
Ali
Transformation Plan
Requirements
Identified
Create
Envision & Design
Future Enterprise
EXECUTION CYCLE
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Enterprise Vision
Alignment
Requirements
Identified
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 36
Lean Enterprise Transformation Roadmap
STRATEGIC
CYCLE
•
Determine
Strategic Imperative
Strategic Implications of Transformation
Nurture Transformation &
Embed Enterprise Thinking
Implementation Results
Pursue &
Sustain
Enterprise
Transformatio
n
Identify Improvement
for
Engage Leadership
in
Transformation
Focus Areas
PLANNING CYCLE
• Long-Term
Determine Impact
on
A Committed Leadership Team
Corrective
Enterprise
Performance
Action
Understand
• P
Prioritize,
i iti
Select
SCurrent
l t and
d
State
Sequence Project Areas
Capabilities & Deficiencies Identified
Implement & Coordinate
Transformation Plan
EXECUTION CYCLE
• D
Develop
l
and
d Synchronize
S
h
i
Envision & Design
Short-Term
Detailed
Implementation
Future Enterprise
Corrective
Action
Plans
Enterprise Vision
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Align Enterprise
Transformation
Plan
Structure and Behaviors
Alignment
Requirements
Identified
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 37
Lean Enterprise Transformation Roadmap
STRATEGIC
CYCLE
Determine
Strategic Imperative
Strategic Implications of Transformation
Nurture Transformation &
Embed Enterprise Thinking
Implementation Results
Implement & Coordinate
Transformation Plan
EXECUTION CYCLE
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Pursue &
Sustain
Enterprise
Transformatio
n
• C
Communicate
i t Leadership in
Engage
Transformation
Transformation
Plan
PLANNING CYCLE
• Commit
C
it R
Resources
Long-Term
Corrective
Action
A Committed Leadership Team
• Provide Education &
Understand
T i i
Training
Current State
• Implement
Projects and
Capabilities & Deficiencies Identified
Track Progress
Short-Term
Corrective
Action
Envision & Design
Future Enterprise
Implementation
Results
Enterprise Vision
Alignment
Requirements
Identified
Align Enterprise
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 38
Lean Enterprise Transformation Roadmap
Pursue &
STRATEGIC
CYCLE
• Monitor
and Measure the
Sustain
Determine
Engage Leadership in
Enterprise
Outcomes
Strategic Imperative Transformatio
Transformation
n
Strategic Implications of Transformation
Nurture Transformation &
Embed Enterprise Thinking
Implementation Results
Implement & Coordinate
Transformation Plan
• Nurture Transformation
PLANNING CYCLE
Long-Term
Corrective
Action
A Committed Leadership Team
• Embed Enterprise
Thinking
• Capture and Understand
Diffuse Lessons
Current State
Learned
Capabilities & Deficiencies Identified
• Synchronize
Strategic,
Strategic
& Design
Planning &Envision
Execution
Cycles
Short-Term
Corrective
Action
EXECUTION CYCLE
Transformation Plan
Create
Transformation Plan
Source: Nightingale, Srinivasan and Mize 2010
Future Enterprise
Short Term Corrective Actions
Enterprise Vision
Long Term Corrective
Actions
Enterprise
Strategic
St
t i Align
IImplications
li ti
Alignment
Requirements
Identified
Structure and Behaviors
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 39
Lean Enterprise Self Assessment
Tool (LESAT)
Tool for executive
self-assessment
self
assessment of
the present state of
“leanness” of an
enterprise and its
readiness to
change
World
Class
1
Over 3400 downloads
LESAT Being updated
Source: Nightingale, Srinivasan and Mize 2010
2
3
Capability maturity model
4
5
Supporting pp
g
materials
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 40
Balanced Scorecard
Strategic
Goals
Mercy Hospital
Dept Goals
Business Goals
FY 2008 - 2009
Jul
Aug
Data Source /
Contact
Benefit
Reduction in Rental Costs (Original Monthly
Cost - $17
$17,185)
185)
Superior Financial Performance
Speciality Beds
Increase in Volume (Baseline 80/Month)
Nationally Ranked Quality
Birthplace
Linda T
Productivity Savings @ 23.93/ hr
Nationally Ranked Quality
Birthplace
Linda T
Linda Glandorf
Nationally Ranked Quality/ Behavioral
Operating
Employer of Choice
Services
Statement Decrease in Repair $
Linda Glandorf
Nationally Ranked Quality/ Behavioral
Operating
Employer of Choice
Services
Statement Decrease in Work Comp $
Linda Glandorf
Nationally Ranked Quality/ Behavioral
Operating
Employer of Choice
Services
Statement Productivity Savings @ 23.93/ hr
Strategic Priority
Nov
- $
- $
-
$
$
-
$
$
$
-
$
$
$
-
$
- $
-
$
-
$
-
$
-
$
- $
-
$
-
$
-
$
-
$
- $
-
$
-
$
-
$
-
Kim Boggess .5FTE @ 23.93/hr (
$
Operating
Superior Financial Performance
Lab Courier Statement Reduction in Cab Fares
Sharon Gibbs will be freed up to recover
additional Revenue due to decrease in Yellow
Stickers
Superior Financial Performance Rev Cycle Late Charges Kay Crist
$
1 FTE Savings @ Annual Increase rate of
Superior Financial Performance Rev Cycle Multiple Events Shawn Steffen $23.93
$
Total
$
Cum
$
- $
-
$
-
$
-
$
-
ICC Alcove
These numbers will come from my Director Expense
Simpler
Supplies
Other
Lean Staff & Team Member Salaries/
Benefits/ SS/ etc.
Total
Cum
Business Plans
Oct
$
$
Superior Financial Performance
Opportunities
Sep
Value
Stream Event
07-08 FY
- $
-
$
-
$
-
$
-
- $
- $
- $
-
$
$
$
-
$
$
$
-
$
$
$
-
Jul
$
$
$
Aug
- $
- $
- $
-
Sep
$
$
$
-
Oct
$
$
$
-
Nov
$
$
$
-
$
$
$
- $
- $
- $
0
- $
$
$
$
-
$
$
$
-
$
$
$
-
$
-
$
0
-
0
$
-
0
$
-
0
Opportunities
Identify Opportunities
Daily metrics
(Communication
Board)
Value Stream
Create the Future State
Process
implemented
Organization takes
ownership
Source: Mercy Hospital – Cedar Rapids, IA
6S
Events
Projects
Bursts
Do-its
Implement Change
Action Items
StandardWork
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 41
Beyond the Lean Revolution:
NEW
•
•
Achieving Successful and Sustainable
Enterprise Transformation
Authors: Deborah J. Nightingale and Jayakanth Srinivasan
Published by AMACOM Press, Out Spring 2011
Strategic Context
• Understanding
Transformation
• Seven Principles
• Transformation
Roadmap
• Role of Leadership
Lenses of Current State
Analysis
• Stakeholders
• Processes
• Performance
Measurement
• Resources
• Maturity
• Alignment
• Wastes
Achieving
g
Transformation
• Articulating the Vision
• Planning Enterprise
Transformation
• Managing
Transformation
• Putting it all Together
Book Structure: Emphasizes Understanding and Executing
Source: Nightingale, Srinivasan and Mize 2010
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 42
http://lean.mit.edu/
Products
9 Downloadable
Publications
• 242 Theses
Th
• 766 Presentations
• 54 Reports, white
papers, articles
• 91 Workshops
• 102 EdNet
EdN t ttalks
lk
• 104 Student research
posters
p
• And more
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 1
Acknowledgements
• Nicolene Hengen
• Deborah Nightingale
• Juliet Perdichizzi
• Mark Prendergast
• Steven Shade
• Jayakanth
J
k th S
Srinivasan
i i
© 2010 Massachusetts Institute of Technology MICI China Lean Summit – Murman 44