Basics of Lean Government Iowa State Association of Counties 2013 Spring School of Instruction

1. Basics of Lean GovernmentIowa State Association of Counties2013 Spring School of Instruction Presented by: Jeff Terrell, Chief of Quality Improvement Bureau Iowa Department of Human Services and Teresa Hay McMahon, Board President Iowa Lean Consortium

2. Why Lean? • Lean is a time-tested proven approach of: • improving processes within an organization, • maximizing customer value, and • reducing waste. • Lean builds a culture of: • leadership, • sustainability, and • empowered employees working as creative problem-solvers. • Lean utilizes cross-functional teams to: • optimize the flow of products and services, and • create value across the entire organization.

3. What Lean is……. • Lean … • is a systematic, relentless elimination of waste and non-value added activity • focused on delivering more value to the customer • respects, enables, and empowers people to be problem solvers and creative thinkers • creates efficiency based on optimizing flow • continuously asks – "How can we get better?"

4. What Lean is not ……. • Lean is NOT… • the elimination of people or employees • a passing fad or phase • about micro-managing • forsaking quality to cut costs • just for large organizations • just for manufacturing companies • just for compliance

5. Iowa - The Beginning: 2003 • Environmental agency approached by the Iowa Coalition for Innovation & Growth • Hot Team on Business Development Processes • Public-private partnership proposed • Consultant offered to run kaizen event

6. First Event - DNR • Air Quality new source construction permits • Issue ~ 2,000 permits per year • Average lead time: 62 days • 62 days was one of the fastest permit times in the country so what was the problem? Lead time reduced to 12 days • Fewer steps in the process (reduced by 70%) • Handoffs (permit moving from person to person) reduced from 18 to 4, a 78% reduction. • 600 permit application backlog eliminated in six months • Process became more customer friendly

7. What Did We Learn? We could improve customer service without sacrificing the environment We could sustain the gains and continue to improve: Lead time down to six days within six months Change could occur in one week - unheard of speed in government

8. Moving Forward • ICIG Hot Team asks for a commitment • DNR agrees to implement Lean • 2004: Six DNR events, one at another state agency • 2005: Governor Vilsack asks all agencies to conduct at least one kaizen event • July 1, 2006, Office of Lean Enterprise established within Department of Management

9. Lean Government Collaborative • 2008: Transitioned leadership from • HOT Team to government • Expandedagency & company membership Dept. of Management Pella Corporation Dept. of Natural Resources Rockwell Collins Iowa Veterans Home Alliant Energy Iowa Workforce Development Wells Fargo Dept. of Human Services Hewlett Packard Dept. of Economic Development Deere & Company Iowa Business Council Association of Business & Industry

10. Lean in the Law 2009: Senate File 98 An act establishing a Lean Enterprise Office within the Department of Management The function of the office is to ensure implementation of lean tools and enterprises as a component of a performance management system for all executive branch agencies. Signed into law by the Governor, March 2009

11. Ten Years on the Lean Journey Nearly 200 Lean events 25+ sponsoring agencies Lead agencies developing internal capacity to support and lead events Working to re-establish a full-time facilitator within the Office of Lean Enterprise

12. What Haven’t We Tried? Environmental permits / Air Quality / Wastewater / Floodplains / Landfills / Manure management Corrections - Offender Re-entry / Procurement Public Safety - Criminal Intelligence / Private Investigators Board of Medical Examiners Investigatory process Veterans Home Admissions / Medical Appointments / Medication Administration / Pharmacy Unemployment Insurance monetary determinations Health facility and Fire Safety inspections Child Abuse Appeals / Foster Child placement across state lines / Medicaid Eligibility / Refugee Services Museum collection management

13. Challenges • Complexity • Capacity • Leadership • Sustaining the Gains

14. Government’s Customers • “The citizens of Iowa” • “The environment” • “The unborn” Really?

15. A New Perspective • The business who applied for the permit • The researcher requesting historical documents • The person standing right in front of me? The person standing right in front of you!

16. Government’s Products • “A clean environment” • “Safe children” • “Health care” Really?

17. A New Perspective • Permits / Notice of Violation • Professional licenses • Child abuse investigation reports • Tax credits • Parole decisions • Medicaid reimbursements • Unemployment checks

18. Leadership Challenges The Eighth Deadly Waste “Not utilizing employees” Getting people to think and TAKE INITIATIVE is the key!

19. A New Reward System • NOT success vs. failure • Action vs. Inaction • Think of the US Coast Guard

20. John Shook • Lean is a proven successful business model. • Many have tried to adopt and adapt it, some successfully, MOST not. Why? What role does Leadership play?

21. Why do we fail? • It’s not over until you sustain the gains and change the culture. • Holding events is the EASY part. • Focus on initial goal achievement

22. Discipline • Monitor and capture results • What is working well and what isn’t? • Must be able to answer that question • Management accountability

23. Leadership Wants to Help …not always sure how to help. • Define the role, provide tools and skills and develop lean thinking at each level • People development processes

24. Role and Impact of Leanon Leadership Levels – John Shook Impact Role Must Provide Vision And Incentive Likes the results Senior Management Left with changed, uncertain role Must Lead Actual Operational Change Middle Management Likes the involvement Must “Do” FRONT LINES A Difficult Struggle at the Mid-management And First Line Supervisory Level

25. LeanLeadership Practice of Leadership vs. Exercise of Power “Lead the organization as if you have no power.” Kan Higashi to Gary Convis (NUMMI’s senior Japanese and American Leaders)

26. A Key Lean Problem • CAVE people • You can go around them on the front line • You must overcome them at the supervisory / management level • Don’t hide the problems • Who are you fooling? Everyone knows what they are.

27. Strategic Event Selection • Beyond pain relief • Framing the projects • Strategic Alignment is critical

28. Culture Change • You must DRIVE change from the top • down • It doesn’t happen overnight and it doesn’t happen easily

29. Invest in Culture Change • The principles of change management are well known. The challenge is to apply them. • Culture change comes from developing leaders, not from completing projects.

30. Sustainability Leadership needs to continuously be guided in Lean methods and develop skills needed to lead in a Lean workplace. Don’t just focus on events, think of each event in terms of developing the culture of Lean first and the specific business process improvement second. Develop structures and capacity to support Lean efforts or else competing interests will slowly erode your investment in Lean, and the culture and results will slide backwards.

31. Benefits of Lean to DHS: • Cultural change– staff empowerment • Improved customer service • Improvement in staff morale • Staff “learn” to trust Lean and solve problems up front • Leaders provide vision & empower staff to recognize and address problems at lowest level.

32. Support & Recognize Lean Iowa Partners in Efficiency Award Annual award & ceremony recognizing public sector employees that significantly and measurably increase productivity and promote innovation to improve the delivery of public services and save money for Iowa taxpayers and businesses. Sponsored by the Lean Government Collaborative and the Iowa Business Council - 1st Awarded in January 2010, and subsequent awards in 2011, 2012 , and 2013. Starting next year the Partners in Efficiency Award will be sponsored by the Iowa Lean Consortium

33. Improving Iowa Competitiveness by Expanding Lean Culture

34. The ILC is a dynamic, member-drivennon-profit organization dedicated to advancing Lean in all sectors of the economy. A leading resource to Iowa organizations who seek to improve their operational effectiveness and efficiencies.

35. Mission

36. All Sectors ILC provides a needed forum for membersfrom every sector to share best practicesand resources, including: • Manufacturing • Consumer product companies • Healthcare • Education • Government • Service organizations • and others

37. Manufacturing Where Lean started … LEAN SUCCESSES IN MANUFACTURING “Being a member of the Iowa Lean Consortium has given us the opportunity to gain exposure to Lean professionals from a variety of organizations. By attending the ILC offerings, we have created a network and relations that we can tap into for specific Lean topics that come from “real” cases. Lean is a journey and we are all in this together, we are all looking for a better way.” Mary Andringa Vermeer, President/CEO

38. Healthcare Today more than ever, healthcare organizations are being asked to execute an extraordinary volume of work with limited resources. LEAN SUCCESSES IN HEALTHCARE • University of Iowa Hospitals & Clinics: increased patient-per-day capacity by improving the CT scan process • Mercy Medical Center - Des Moines: process improvement team completed more than 300 projects in the past 8 years “We joined the ILC in 2010 and have attended many excellent training sessions on a wide range of topics. We have also hosted training sessions and participated in ‘Gemba’ walks through Lean-rich environments with Iowa companies. All of these experiences have been very valuable to us as we try to build a Lean culture at Mercy.” Matt Garcia Catholic Health Initiatives, Performance Excellence Division Director

39. Higher Education Public higher education institutions face a high level of scrutiny by taxpayers who want their tax and tuition dollars used wisely. These organizations must deliver services with great efficiency. LEAN SUCCESSES IN HIGHER EDUCATION • Process for reviewing applications for research projects • Research lab’s shared information database “We first implemented the Lean program in 2006 when we were challenged to do more with less, due to changes in state appropriations. Lean practices have helped us to effectively optimize and organize both human and material resources across and within departments. The implementation of Lean benefits not only the University, but our students and constituents as well.” Richard SeeUniversity of Iowa, Manager, Business Process Improvement

40. Front Operations It may be easier to see Lean at its best on the shop floor where the process is more visible, but Lean has broad implications for the front-end operations as well. When the entire organization can take advantage of a Lean culture, results are multiplied. LEAN SUCCESSES IN FRONT OPERATIONS Examples from HNI Corporation • Custom product mock-ups – Mock-up completes-on-time rate improved by 48% and decreased missing parts by 40%. • Restructured fabric offerings program – Focused on inventory reduction and streamlined fabric offerings, the company saved $500,000, as well as improved lead times for standard offerings by 5 days. • Monthly Budget Close Process – Eliminated time wasters, such as “sleeping emails” and lack of scheduled steps, and carved two weeks out of the process.

41. Teamwork Executives Members know they are not alone through every step of theLean journey! Executives Beginning 20+ Years Front-line Managers

42. Member Benefits A Member Network providing cost-effective, experiential learning opportunities. • Facilitated events by experienced practitioners, both in-state and out • Collaboration, shared activities, and participant-based learning • Interactive onsite workshops for leadership and practitioners • Roundtable discussions on key strategic change issues • Opportunities to gain from both teaching and sharing, and participatingand learning • Cross-sector sharing for actionable leadership • Building a culture for change management • Driving strategy to action, while keeping it practical • Annual learning exchanges • Lean assessments • Networking with practitioners

43. Member Benefits

44. 2012 ILC Events • February – Hoshin Planning • March – “Strategic Lean” HNI, Muscatine • April – “Perspectives on Value Stream Mapping” • May – Rockwell Collins • July – “Sustaining Lean”Keynote, breakouts & tour, Wellmark BCBS, Des Moines • August – “Lean Tools” Breakout sessions, tour, Kinze Manufacturing, Williamsburg • October – “Creating a Collaborative Problem Solving Culture” Keynoter John Shook, Breakout sessions – Pella Global Pavilion • November – Lean Leadership • December – Lean and the Environment

45. 2013 Events • January – Huxley - Swim Lane Mapping Workshop • March – Mt. Pleasant - Hearth & Home: Keeping the Lean Fire Burning • April – Forest City - Art Byrne: Lean Transformations • May 7 – Ames - Tracey Richardson: Problem Solving to Align Purpose, Process and People • June - Swim Lane Mapping Workshop – Back by popular demand • August – Waterloo – Billy Taylor: Lean Leadership • October 30 – Fall ILC Conference – Jamie Flinchbaugh, Keynote Speaker

46. Board of Directors

47. Join Us Iowa Lean Consortium 100 E. Grand Avenue | Suite 160 Des Moines, IA 50309 515-259-0554 Email: ilc@iowalean.org Visit our Website to learn more about the ILCand to join our membershipin advancing Lean concepts across Iowa! www.iowalean.org

48. Questions? Contact Information: Jeff Terrell, Chief of Quality Improvement Bureau Iowa Department of Human Services jterrel2@dhs.state.ia.us 515.281.3234 and Teresa Hay McMahon, Board President Iowa Lean Consortium thmcmahon@q.com 515.250.7078