Tonight’s Agenda

1. Managing Culture and Change for Successful Quality and Lean Manufacturing Implementationspresented toASQ Section 702October 15, 2003byCynthia OlsonSystems Quality Consulting

2. Tonight’s Agenda • Why the Ability to Change is Important • About Culture • Is Your Culture Change-friendly? • Leadership for Change • Why People Resist Change • Management Strategies • Key Changes Required for ISO 9000 Implementation • Key Changes Required for Lean Implementation • Some Final Notes

3. Why the Ability to Change is Important

4. Winston Churchill on Change “To improve is to change; to be perfect is to change often.”

5. What Darwin Really Said... “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” Charles Darwin

6. In Other Words... Adapt or perish, now as ever, is nature's inexorable imperative. H. G. Wells What is true in nature, is also true in business.

7. There Are Those Who Adapt... "I think there is a world market for maybe five computers." - Thomas Watson, chairman of IBM, 1943 "We don't like their sound, and guitar music is on the way out.” - Decca Recording Co. rejecting the Beatles, 1962 "640K ought to be enough for anybody." - Bill Gates, 1981

8. And Those Who Do Not Adapt Quickly Enough... “Hey, we've got this amazing thing...we'll give it to you. We just want to do it. Pay our salary, we'll come to work for you.' And they said, 'No.’” - Apple Computer Inc. founder Steve Jobs on attempts to get Atari interested in his and and Steve Wozniak's personal computer.

9. Where Change Fits In • Quality • Continuous Improvement • Response to Customer Requirements • Lean • Replaces Traditional Manufacturing Approach • Seek Perfection • Response to Customer Needs • Change Becomes a Way of Life

10. Why is Change So Hard? EGO If we all know we need to improve, the question becomes: why don’t we? It’s the people issues that make business hard!

11. About Culture

12. What is a Culture? • Culture is a way of describing how a group of people live together. • Culture includes; • the foods you eat • clothes you wear • rules of behavior • ideals and values • communication and more. • The culture is learned in everyday living.

13. What is a Workplace Culture? • Workplace culture is a way of describing how a group of people work together. • Workplace culture includes; • clothes you wear • attitudes and rules of behavior • ideals and values • communication and more. • The culture is learned in everyday working. • If management doesn’t create the desired culture, one will develop anyway.

14. Workplace Ideals and Values • Whatever management rewards, management will get. • Reward “yes men” and you will get obedience, but no creativity. • Reward squeaky wheels, soon all the wheels will squeak. • Reward those that would climb on the backs of others to reach the top, and you will have “politics” instead of production.

15. Philosophy Technology Culture The Role of Culture in Lean Success Culture is the most widely neglected factor when implementing Lean Manufacturing. Without addressing the cultural issues, long term Lean success is not likely.

16. Culture is the Foundation Without the right culture, Lean tools will fail. Buy-in, cooperation and involvement of all employees is critical to success. Lean success requires a culture of capable, flexible, highly motivated people in an environment of enlightened experimentation.

17. Culture Key Lean Workplace Attitudes Empowerment Fearlessness (trust in management) Pride in work Customer focus

18. Culture Key Workplace Ideals and Values Focus on elimination of waste Belonging (member of team) Responsibility to team and teammates Delighting the customer Sharing of information Flexibility Capability

19. Is Your CultureChange-friendly?

20. Culture Examples of Cultural Hurdles Culture of Blame - Lean makes problems visible, emotional reactions will be devastating if the culture is not in line with the Lean philosophy Culture of Mistrust - Fear can paralyze employees, make them unwilling to “stick their necks out” Culture of Hierarchical Dividing Lines - Unless employees are invested in the success or failure of the company, its survival is “management’s problem.”

21. Look for who is to blame? Focus on the process, not the people. Do You Have a Change-Friendly Culture? When something goes wrong, do you and your managers; OR Mass Production Culture Change-friendly Culture Lean and ISO make problems visible so they can be fixed, when this happens, your people should be focused on fixing processes not dodging bullets.

22. Raise the bar for next months numbers without investigating the cause? Reward the team, discover the cause, and institutionalize the change. Do You Have a Change-Friendly Culture? When something goes right, do you and your managers; OR Mass Production Culture Change-friendly Culture You get what you reward. Finding out what caused the upswing and making it a permanent part of the process allows you to keep the gains you make.

23. Are all replaceable? Are the company’s most valuable asset. Do You Have a Change-Friendly Culture? Do you and your managers believe that employees; OR Mass Production Culture Change-friendly Culture Feeling valuable and knowing one can “make a difference” are some of the most powerful motivating forces for employees. Remember, Lean works because of the people, not because of the tools.

24. Cancel the project and cut your losses? Encourage the employees to learn from their mistakes and try again. Do You Have a Change-Friendly Culture? When a plan or project is failing, do you and your managers; OR Mass Production Culture Change-friendly Culture Lean Manufacturing requires an atmosphere of experimentation. Failures are expected and planned for. Employees must know they will not lose their job simply because they tried and failed.

25. Ignore it, (or worse, steal it) they’re not paid to think. Great! Let’s give it a try. Do You Have a Change-Friendly Culture? When an employee has a suggestion, your (or your manager’s) response is; OR Mass Production Culture Change-friendly Culture Toyota provides training, tools, and boundaries, then solicits and implements 95% of all employee ideas for improvement. Toyota employees average 75 ideas per year, the typical American employee; only one every other year.

26. Can Workplace Culture Change? • Cultures are not static, they are constantly changing. • The leaders of an organization set the tone for the culture. • Change requires a strong commitment and daily follow through on the part of top management. • When the leaders change their behavior and attitudes, the rest of the organization will follow.

27. Leadership for Change

28. The Leader as Bus Driver The leader’s job is to “drive the bus” • Get the right people on the bus • Get the wrong people off the bus • Make sure the right people are in the right seats • Know where the bus is going • Be committed to getting the bus to its destination • Provide resources to ensure trip’s success

29. Leadership Being a great leader means knowing; • When to use a mirror or a window • Your employees and what motivates each of them • That people change only when they choose to (WIIFM) • That communicating change requires absolute honesty • That vision is essential

30. Leadership Being a great leader means knowing; When to use a mirror or a window • When things go wrong, use a mirror • Look inward to discover what you did not do correctly or what you could have done to prevent the problem. • Take responsibility for failures (In a Lean culture, --IT rolls uphill)

31. Leadership Being a great leader means knowing; When to use a mirror or a window • When things go right, use a window • Look outward to the shop floor to acknowledge and reward achievement • Give credit (loudly, often, and meaningfully) to those who improve the success of the company Suggested reading; Good to Great by Jim Collins

32. Leadership Being a great leader means knowing; People change because they choose to • If you tell someone, they might remember • If you show someone, the might remember better • If you involve someone, they will become invested in it. Then “It’s” success is important to them • Don’t forget the power of WIIFM

33. Leadership Being a great leader means knowing; Communicating change requires honesty and openness • Secrecy is a bad strategy; if people don’t know the details, they will invent them (and not for the better!) rumors will fly. • If they don’t know what’s really going on, they cannot help make it come out right.

34. Leadership Being a great leader means knowing; Communication is a two-way street. • Formula for change leadership communication: • Step 1: Give accurate and complete information • Step 2: Ask questions • Step 3: Discuss until all parties understand/agree • Repeat steps 1 - 3 often and with everyone, indefinitely.

35. Leadership Being a great leader means knowing; Vision is essential • Change comes when we intensely envision the desired future state. Once the vision is clear in our minds, we intuitively take the necessary steps to make it reality. • Without a vision, the bus has no place to go; no change will occur.

36. Why People Resist Change

37. Why People Resist Change • There is a basic human need to be right. On a primal level: Being right = surviving Being wrong = being dead • To accept change means to accept that you might have been wrong in the past • If one is surviving now, then what one is doing now is right, to change means to risk being wrong, and not surviving.

38. Why Employees Resist Change Each person has a different capacity or willingness to accept change based on; 1. Personality - especially; the strength of the “I am right” characteristic 2. Past experiences with change 3. Degree of perceived “loss” 4. Level of change the person is currently experiencing.

39. Why Employees Resist Change 1. Personality Most companies employ a few workers and/or managers that could be called concrete-heads. Their belief is that survival depends on resisting any change. They have the ability to single-handedly kill a Lean initiative. To be successful, an organization must get these people out of the way of “the bus.”

40. Why Employees Resist Change 2. Past Experience With Change Even if your employees have never been laid off due to some “re-engineering” project or another, they know someone who has. The here and now is comfortable, the future is unknowable, frightening. Employees can be expected to embrace a change initiative only to the extent that they trust the management.

41. Why Employees Resist Change 3. Degree of Perceived “Loss” Your employees have built empires within the company. The change may signify a loss of one or more things: • status • close working relationships with particular employees • recognition for past work • experience level Mine!

42. Why Employees Resist Change 4. Level of change the person is currently experiencing Three general classifications of change are; • Global change technology, politics, inflation, etc. • Organizational change initiatives and changes in the workplace • Personal Change relationships at work and home, finances, health, bad hair days, etc.

43. Management Strategies

44. Management Strategies for Change • For managers, negotiating change successfully is a matter of displaying excellent leadership skills and knowing when to use each of these four strategies: • Pummel • Push (Now hear this!) • Pull (What do you think?) • Pamper

45. Pummel • Characterized by an attitude of, “Do what I say or you will die (be fired).” • Organizations that rely mainly on Pummel as a management strategy use fear as the motivating emotion. • Employees are viewed at best as cogs in the works, at worst, slaves.

46. Push • Characterized by an attitude of, “Do what you must or the company will die.” • Organizations that rely mainly on Push as a management strategy use force and fear (but not brutality) to accomplish positive action • Employees are viewed as workers with a conscience.

47. Pull • Characterized by an attitude of, “Do what you must to achieve the future you dream of.” • Organizations that rely mainly on Pull as a management strategy use inspiration and empowerment for people to motivate themselves. • Employees are viewed as human beings with free will.

48. Pamper • Characterized by an attitude of, “Do what you feel like doing.” • Organizations that rely mainly on Pamper as a management strategy hope that the workers will perform but do not hold them accountable. • Employees are viewed as “entitled” which leads them to act like children and eventually renders them useless or worse.

49. Using the Four Management Strategies Pummel has virtually no use in a “change” culture. A metaphor for Push is the burning oil platform. Push is best used to spur people into action to save themselves. Change (jump into the water) or die (company fails). It is the second most useful strategy in a “change” culture.

50. Using the Four Management Strategies Pull is the most useful strategy for managing in a “change” environment. It challenges workers to come to their own rescue. Top management provides a strong vision to which they are committed and empower the workers to make it real. Pull can permanently change “workers” into “movers and shakers.” Pamper, like Pummel, has no significant value in a “change” culture.