Lean, Leadership & Ethics, Part 1

By Pascal Dennis (bio)

Been reflecting about each of these lately, and how they relate.

But what’s Ethics got to do with anything?

We’re in a proverbial knowledge economy. The market caps of, say, Google, Facebook and Apple, dwarf that of Toyota.

Google, Facebook and Apple have comparatively little in physical capital. ‘All’ they have is intellectual capital, and in particular, human capital.

How does human capital differ, from say, physical or financial capital?

Unlike, say, a machine, or a bond, human capital can chose not to deploy. Human capital can chose to walk out the door, in fact.

“That army will win which has the same spirit,” said Sun Tsu twenty-five hundred years ago. It’s never been more true.

Yet Gallup’s latest State of the Global Workplace report tells us that only 13% of employees are engaged in their work!

Big company disease and organizational dysfunction is so deeply entrenched that we barely flinch at such data.

Imagine you’re a factory manager and your machines are operating at only 13% of capacity!

Why are people so disengaged? Gallup doesn’t say. But I suspect that disillusionment, or even disgust, at what the organization stands for, or how management behaves, is a major reason.

There’s more. Millennials (those born after 1980) will comprise 75% of the workforce by 2025. And Gallup tells us that ethical behavior in corporations is even more important to millennials than to their parents.

Of course Ethics matters. People will not follow swine, at least not willingly, for very long. People will certainly not commit their hearts and minds – unless they feel good about what the organization stands for.

Best regards,

Pascal




In case you missed our last few blogs... please feel free to have another look…

The Work of Leaders
Why is Lean So Hard? – Organizational Elements
The Trouble with Corporate Clichés
Economy I and II - Never the Twain Shall Meet?

What is Intellectual Capital & Why Should You Care?

By Pascal Dennis (bio)

I left engineering & business school well versed in how to take care of two kinds of assets:

• Financial, and
• Physical

Managing these kinds of capital is necessary, of course.

But in the world of Google, Apple, Amazon and Facebook, is it sufficient?

Clearly not. Nowadays, many extremely valuable companies. Have negligible physical assets.

What they do have is Intellectual Capital -- the sum total of all the knowledge, experience, capability, creativity and urgency of all team members.

How well do we manage Intellectual Capital?

The answer is obvious, is it not?

Do we harvest this splendid resource?

Do today's organizations grasp the catastrophic effect of thoughtless layoffs, excessive exec compensation, stifling bureaucracy and all other IC killers?

There are many kinds of wealth -- financial, physical, intellectual, relational, reputation, time and so on.

These are inter-convertible. For example, my daughter Eleanor has time wealth (& Dad's wallet...), which she is transforming into capability wealth.

When she graduates, God willing, she'll translate capability wealth into financial wealth.

But Intellectual Capital differs from financial & physical capital in that,

1. It can be withheld, and
2. It can walk away,

IC is controlled by our team members.

Treating them like dirt is akin to hitting yourself in the face with a two-by-four.

How many corporations understand this?

Best,

Pascal


In case you missed our last few blogs... please feel free to have another look…

Value Stream Maps
What is a Key Thinker?
Macro Value Stream Kaizen – Zoology
Poka-Yoke – Preventing Inadvertent Errors

Lean, Leadership & Ethics, Part 1

By Pascal Dennis (bio)

Been reflecting about each of these lately, and how they relate.

But what’s Ethics got to do with anything?

We’re in a proverbial knowledge economy. The market caps of, say, Google, Facebook and Apple, dwarf that of Toyota.

Google, Facebook and Apple have comparatively little in physical capital. ‘All’ they have is intellectual capital, and in particular, human capital.

How does human capital differ, from say, physical or financial capital?

Unlike, say, a machine, or a bond, human capital can chose not to deploy. Human capital can chose to walk out the door, in fact.

“That army will win which has the same spirit,” said Sun Tsu twenty-five hundred years ago. It’s never been more true.

Yet Gallup’s latest State of the Global Workplace report tells us that only 13% of employees are engaged in their work!

Big company disease and organizational dysfunction is so deeply entrenched that we barely flinch at such data.

Imagine you’re a factory manager and your machines are operating at only 13% of capacity!

Why are people so disengaged? Gallup doesn’t say. But I suspect that disillusionment, or even disgust, at what the organization stands for, or how management behaves, is a major reason.

There’s more. Millennials (those born after 1980) will comprise 75% of the workforce by 2025. And Gallup tells us that ethical behavior in corporations is even more important to millennials than to their parents.

Of course Ethics matters. People will not follow swine, at least not willingly, for very long. People will certainly not commit their hearts and minds – unless they feel good about what the organization stands for.

Best regards,

Pascal

Reprise: Lean & the Non-Profits?

By Pascal Dennis

Charity is a fundamental virtue.

We have to help those entangled in the 'web of circumstance'.

There, but for the grace of God, go I.

More and more, I like to give of myself, my time and effort.

It's concrete, and NGOs & non-profits are in dire need of Lean support.

Are they not swimming in waste?

Over-processing, defects & delay are perhaps the most obvious.

For example, I've donated annually to a well-known children's charity.

Yet they continually send me, at high cost, the same bulk mail, even after I wrote and asked them not to.

Over-processing and defect waste, no?

I'm passionate about helping people with disabilities, and have offered to help half a dozen agencies involved in such work.

Only one has bothered to respond and the message was, 'Thanks, but no thanks.'

Are NGO's and Non-Profits not interested in running better?

Sadly, the message seems to be: "Just send us your money. We'll figure out how to spend it."

Sorry, you'll figure out how to waste it...

(Am I becoming cynical?)

Like any organization, NGO's and Non-Profits have a purpose, customers and processes.

Why shouldn't they be as effective as Apple, Amazon, Toyota, GE or any great organization?

Best,

Pascal

Pascal Dennis Bio

Lean, Leadership & Ethics, Part 1

By Pascal Dennis

Been reflecting about each of these lately, and how they relate.

But what’s Ethics got to do with anything?

We’re in a proverbial knowledge economy. The market caps of, say, Google, Facebook and Apple, dwarf that of Toyota.

Google, Facebook and Apple have comparatively little in physical capital. ‘All’ they have is intellectual capital, and in particular, human capital.

How does human capital differ, from say, physical or financial capital?

Unlike, say, a machine, or a bond, human capital can chose not to deploy. Human capital can chose to walk out the door, in fact.

“That army will win which has the same spirit,” said Sun Tsu twenty-five hundred years ago. It’s never been more true.

Yet Gallup’s latest State of the Global Workplace report tells us that only 13% of employees are engaged in their work!

Big company disease and organizational dysfunction is so deeply entrenched that we barely flinch at such data.

Imagine you’re a factory manager and your machines are operating at only 13% of capacity!

Why are people so disengaged? Gallup doesn’t say. But I suspect that disillusionment, or even disgust, at what the organization stands for, or how management behaves, is a major reason.

There’s more. Millennials (those born after 1980) will comprise 75% of the workforce by 2025. And Gallup tells us that ethical behavior in corporations is even more important to millennials than to their parents.

Of course Ethics matters. People will not follow swine, at least not willingly, for very long. People will certainly not commit their hearts and minds – unless they feel good about what the organization stands for.

In the weeks to come, we’ll dig into Ethics and how it relates to Lean and Leadership.

Best regards,

Pascal

Pascal Dennis Bio

How Will You Motivate People? - Part 2

By Pascal Dennis

Me again, continuing our road 'to the interior'.

So how does a leader motivate people to do extraordinary things?

(Change is hard, transformation hurts. By contrast, doing nothing is easy.)

Here's what I have found.

Safety & Security are Job One

If people don't feel secure in their jobs, forget it.

Great companies live the 'Safety first' mantra -- and that means both physical & psychological safety.

Immature organizations may pooh-pooh such ideas.

'Human capital' -- morale, ingenuity, flexibility, problem solving -- have little value for them.

Does that make sense in the world of Apple, Facebook, Amazon and Google?

Noble Goals

People want to be involved in something bigger than themselves.

No man is an island, said the poet John Donne. People will die for a noble idea, a just cause.

So leadership is story-telling, narrative.

How to frame our activities so that our team members feel they 'building a cathedral', and not simply cutting stone?

Then, how to deploy our goals so that each front line team is engaged?

Simple Decency and the Great Virtues

The Great Virtues are enduring standards of behavior. As in manufacturing, ethical standards make problems visible.

People will not follow swine, at least not for long. Safety plus noble goals plus simple decency allows people to relax.

'I'm okay here. These are good people & they'll do the right thing...' -- which unleashes commitment & creativity.

Brain imaging technology reinforces these observations. Under stress, the Pre-frontal Cortex, the brain's managerial centre, shuts down.

The limbic and sub-cortical, fight or flight, parts of the brain light up.

Fear makes us stupid. Deming intuited this decades ago: "Drive fear out of the organization!"

Safety, Noble Goals and Simple Decency are simply good business.

Great organizations, those that have prospered for generations, understand this in their marrow.

(For more on the Great Virtues, see here)

Best,

Pascal

Doing the Right Things vs. Doing Things Right

By Pascal Dennis

Effectiveness versus Efficiency - an eternal challenge.

Those of us who've grown up in manufacturing naturally lean toward to latter.

We know how to do things right - how to reduce waste & thereby, Lead Time.

As Taiichi Ohno famously said, "All we're trying to do is reduce Lead Time."

It takes a lifetime to learn how to do this, (at least for me.)

Efficiency - (Execution, Operational Excellence, call it what you will) - often trumps everything.

But not always.

What if Efficiency is not the constraint?

Can you think of any examples of value streams that are inefficient, but still fabulously successful?

(Hint: IPod, IPhone, IPad...)

Are Apple's value streams the most efficient? Is the IPad, for example, as well built, as, say, a Toyota Corolla?

(If you have teenage daughters, as I do, you may already know the answer. Try dropping your IPad a few times!)

But Apple's design is so transcendent, it doesn't matter. When Steve Jobs unveiled the IPad, everybody wanted one.

Price and robustness were not an issue. In other words, here, Effectiveness trumps Efficiency.

Don't want to be misunderstood. I am not saying that Efficiency is of no consequence. Quite the contrary.

In fact, Samsung's combination of strong design plus robust manufacturing is challenging Apple.

The combination allows Samsung launch multiple products, cull the losers, and double down on the winners.

Please reflect on these ideas - in Strategy, above all.

(As I said, manufacturing mental models tend to lean in one direction.)

A common, subtle failure mode is focusing on Efficiency, when it's not the constraint.

Best regards,

Pascal

PS Reflections of a Business Nomad - the audiobook is in progress!

We're in the recording studio now. Keep you posted. Thanks for your encouragement.

What is Intellectual Capital & Why Should You Care?

By Pascal Dennis

I left engineering & business school well versed in how to take care of two kinds of assets:

• Financial, and
• Physical

Managing these kinds of capital is necessary, of course.

But in the world of Google, Apple, Amazon and Facebook, is it sufficient?

Clearly not. Nowadays, many extremely valuable companies. Have negligible physical assets.

What they do have is Intellectual Capital -- the sum total of all the knowledge, experience, capability, creativity and urgency of all team members.

How well do we manage Intellectual Capital?

The answer is obvious, is it not?

Do we harvest this splendid resource?

Do today's organizations grasp the catastrophic effect of thoughtless layoffs, excessive exec compensation, stifling bureaucracy and all other IC killers?

There are many kinds of wealth -- financial, physical, intellectual, relational, reputation, time and so on.

These are inter-convertible. For example, my daughter Eleanor has time wealth (& Dad's wallet...), which she is transforming into capability wealth.

When she graduates, God willing, she'll translate capability wealth into financial wealth.

But Intellectual Capital differs from financial & physical capital in that,

1. It can be withheld, and
2. It can walk away,

IC is controlled by our team members.

Treating them like dirt is akin to hitting yourself in the face with a two-by-four.

How many corporations understand this?

Best,

Pascal

Building Intellectual Capital

By Pascal Dennis

What's the proper role of the Kaizen/Continuous Improvement Office?

I was taught that it was three-fold:

1. To create capability
2. To share learning
3. To create kaizen spirit

More and more though, I think about the great Taiichi Ohno.

"I am not just building cars - I am building people!"

A splendid concept from a true revolutionary.

I am building people!

Underlying this sentiment was Ohno's remarkable respect for people - expressed by challenging them to do their very best!

Tough love indeed.

I've been privileged to have such senseis, both at Toyota and in Aikido.

But how does this help the corporation? Where does this show up on the Balance Sheet?

Sadly, it doesn't - for now.

But I am hopeful that before too long Intellectual Capital will begin to appear on Balance Sheets

Intellectual Capital means people - and their capability, creativity, flexibility, sense of urgency, knowledge, relationships and camaraderie.

At companies like Google, Apple, Amazon, Facebook, Intellectual Capital dwarfs financial and physical assets.

So how can we continue to ignore it?

So, let me suggest that in the next decade, the Kaizen/CI Office needs to think as follows:

Our job is to create Intellectual Capital - by growing people.

Best,

Pascal

Economies I & II

By Pascal Dennis

Great piece in the NY Times recently by John Brooks.

Brooks comes up with a helpful formulation: Economy I & II

The former comprises private sector companies like Apple, Amazon, Toyota and GE.

These companies face withering competition every day.

As a result, they're wonderful at creating value, but not so good at creating jobs.

Economy II, by contrast, comprises government and quasi-government organizations like schools, universities and hospitals.

These organizations face comparatively little competition (or in the case of government agencies, none at all.)

As a result, they're wasteful and inefficient -- but good at creating 'jobs', of a sort.

Lean thinkers will argue that a job by definition is an activity that creates value for a customer.

Seen in this light, is a job in a suffocating bureaucracy that serves no one, truly a job?

I don't want to be misunderstood. Economy II is full of smart dedicated people who work hard and want to do the right thing.

They deserve what Deming called the 'pride of workman ship'.

They deserve to be involved in managing and designing their work. Given the opportunity, I've found they're very good at it.

The bigger problem is that Economy I organizations are no longer able to pay for Economy II.

As a result Economy II is bankrupting the state. Seen in this light, Greece is the proverbial canary in the coal mine.

Wither thou goest, go I.

Most western economies will hit the same wall before long.

What to do?

More next time.

Best,

Pascal

Lean & the Non-Profits?

By Pascal Dennis

Charity is a fundamental virtue.

We have to help those entangled in the 'web of circumstance'.

There, but for the grace of God, go I.

More and more, I like to give of myself, my time and effort.

It's concrete, and NGOs & non-profits are in dire need of Lean support.

Are they not swimming in waste?

Over-processing, defects & delay are perhaps the most obvious.

For example, I've donated annually to a well-known children's charity.

Yet they continually send me, at high cost, the same bulk mail, even after I wrote and asked them not to.

Over-processing and defect waste, no?

I'm passionate about helping people with disabilities, and have offered to help half a dozen agencies involved in such work.

Only one has bothered to respond and the message was, 'Thanks, but no thanks.'

Are NGO's and Non-Profits not interested in running better?

Sadly, the message seems to be: "Just send us your money. We'll figure out how to spend it."

Sorry, you'll figure out how to waste it...

(Am I becoming cynical?)

Like any organization, NGO's and Non-Profits have a purpose, customers and processes.

Why shouldn't they be as effective as Apple, Amazon, Toyota, GE or any great organization?

Best,

Pascal