Does going lean = going wrong

"Dear President of Chad, let me talk to you about six sigma.."  This was the opening line of an imaginary conversation put up on Twitter by Sir Liam Donaldson, former Chief Medical Officer of England.  I thought it was brilliantly insightful and for me summed up how we are, perhaps, just too clever for our own good sometimes.  Why would the President be interested indeed?  What difference would it make to solving the pressing problems of the day?  Do any of the management fads ever really address what matters to people?

"If life conformed to six sigma rules we would all still be slime"  Gary Hamel

I began to wonder why any of us have flocked to the bandwagon of lean, six sigma, or leansixsigma or any of the countless management fads that have promised the nirvana of Toyota like levels of performance differentiation?  After all results fail to come up to expectation (at least 60% of six sigma initiatives fail to deliver according to one study) and the "improvements" reported by lean projects don't seem to impact the bottom line.  Never mind the fact that we still have people experiencing shocking levels of care.

That hasn't stopped Unipart flogging lean as the answer to the NHS's quality and cost conundrum spinning the mess that is HMRC lean into something positive.  The Unipart CEO says lean is the answer, a committee of MPs considers HMRC to be incompetent - you be the judge

For all its promise we still, as Robert H Brook said in his article in JAMA announcing the end of the quality improvement movement, have no idea if the quality improvement movement, most typified by lean, has made any difference.  He said:

"more than 40 years after the birth of the quality improvement movement, there is still not much known about what has been accomplished. There is little information about whether quality is better in one state or country than another; what the relationship is between the amount a country spends on health care and the quality of care provided in its health care system; whether a business case for quality actually exists in an individual institution or physician’s office; and whether the amount of money spent on improving quality is too little or too much".

We need to understand why this would be.

Lean arrived in service organisations that were already highly industrialised – for instance, call centres and back offices managed as mass-production systems. Managers of these organisations think of their job as continually juggling the following equation: 

• how much work is coming in
• how many people do I have
• how long do people take to do things

Under this production-driven view activity equals cost.  With this logic efficiency becomes; the more we reduce activity times the more we cut costs.  Managers then focus on three things:

• standardising work
• reducing activity times (because activity = cost)
• driving out waste

Viewed from this perspective lean was (and is) seen by many as the heaven sent answer to managements known problems.  Yet that very assumption – that we already know what our real problems are – runs directly counter to the teachings of the originator of "lean" (a label he would have rejected), Taiichi Ohno. 

Ohno, the man who developed the Toyota Production System, taught managers that their first and primary task is to study their systems, to identify and understand what their real problems are. He taught that through acting on the system – the way the work works – and focusing on relationships, financial results would follow. To focus on financial results is to do it the wrong way round – they are the by-product of identifying and resolving the problems in the system.

Yet, systemically, focussing on the finances, or the costs, of doing things is precisely how the NHS is addressing its current issues.  It is understandable.  After all, it took Toyota decades to reach its level of mastery.  A process based on learning how to learn, not applying a set of tools.  Nevertheless it is potentially damaging as the way we approach the design and management of work has far reaching consequences in terms of the policies we follow and the impact they have.

One of the most powerful ways to understand how any system works is to understand demand.  Studying service organisations as systems in this way reveals some counterintuitive truths. To treat all demand as though it is work to be done is to miss the truth that much of it is what Seddon calls failure demand (demand caused by a failure to do something or do something right for the customer [Seddon 2003]). Much failure demand is predictable, and if it is predictable it is preventable. 

It cannot be removed without understanding its causes, however.   So when we study service organisations as systems (of which the NHS is one) guess what two of the major causes of failure demand are?  Well, perhaps ironically, they are:

• standardisation of work
• management‟s focus on activity management

If we switch off preconceptions and really study service organisations as systems, we discover that they have very different problems to solve from car manufacturers. By far the most important is designing a system that can absorb the variety of customer demand. If we can achieve that, costs will fall as service improves. It is the essence of the "Toyota solution" for service organisations – and has little to do with what is commonly accepted as "lean".

By believing the pitch that the Toyota tools are universal (again contradicting the advice of Ohno, who insisted that codifying method would have exactly this damaging result), managers have failed to realise they have missed the first and vital step and thus the whole point of the Toyota approach. A focus on reducing activity times to cut costs not only leads them to ignore a much more powerful lever for improvement – understanding demand – but also lulls them into the belief, understandable but erroneous, that they must, as a result, automatically be improving end-to-end performance - the complete flow of service from first contact to final solution - as well. As careful analysis shows, focusing on activity times usually damages end- to-end performance from the customers point of view, with inevitable upward impact on costs.

Leaders and managers often make the mistake of supposing that tools and techniques can deliver profound shifts in thinking; especially when, for example, consultants teach ‘lean’ as a collection of techniques—kanban, kaizen, TQM, Five S, Six Sigma. Yet such ‘tools’ are only the outward manifestation of the underlying systems logic, developed to solve system problems. But unfortunately they can be, and often are, used in a non-systems way as just another means of control. Tools are the least important element in systems thinking (and it may be better to avoid the term altogether—see Seddon, 2003); the most important part is understanding of the organization as a system and thinking in terms of systemic cause and effect. At this point managers can ‘pull’ together a number of useful learning aids according to the context and circumstances.

There are countless examples in the NHS of the impact of this kind of thinking, from standard times for GP appointments to standardising IT as per NPfIT.  I thought it might be helpful to offer an example of a different sector as I think there are parallels with how the NHS views its workforce.

The leaders of Portsmouth City Council‟s housing repairs service learned, through studying their service as a system, that focusing on the activity of their tradesmen actually drove costs up, a counterintuitive realisation.  Working to standard times failed to reflect the variety in the work being done (not all tap repairs, for example, are the same) and setting targets for jobs-per-man-per-day led to meeting the target, but not ensuring jobs were completed. 

Using knowledge gained by studying demand – the type and frequency of repairs required by the properties – they have designed a repairs service that now delivers repairs on the day and at the time tenants want (if BT could learn to do that we‟d all cheer), and this revolutionary design operates at half the original cost – a result on a par with Toyota‟s original level of differentiation [Zokaei, Seddon and O‟Donovan, 2010]. Ohno would have been impressed;  Gary Hamel recognised Portsmouth‟s innovation with an award.  It is a true economic benchmark [Hamel and LaBarre, 2010].

Studying demand leads managers to the recognition that service organisations need to use people to absorb variety.  In Portsmouth's case it means the tradesman determines how long s/he needs to complete repairs. Likewise, in service centres it means removing all arbitrary measures of performance, like standard times and productivity targets in favour of developing measures of actual performance in customer terms and designing a service based on knowledge of customer demand.

A similar approach to stroke services generated the same feasibility bending reductions in cost.

But lean, as it has been applied in so many service organisations, ignores these vital realisations.  Instead lean interventions treat all demand as work to be done, assume that activity is equivalent to cost and report reductions in activity time as annualised savings, in complete ignorance of the true impact on performance. 

The reality is, as it was for Ohno, that true costs are in flow, not activity, and in service organisations this means the true costs of service are the total number of transactions it takes for a customer to receive a service.

But what of the successes we hear so much about?  The dramatic improvements that occur as a result of applying lean concepts.  Isn't this proof that lean works?  According to Brook, we don't know.  Ovreit couldn't answer the question of whether improving quality saved money either.  In the private sector, where money talks more loudly, many are abandoning their lean programmes.  Some do so simply on the basis of the failure of "improvements" to hit the bottom line, the more enlightened do so from a recognition that lean only served to reinforce the current management paradigm, and it is this that has to change if we are to emulate Toyota‟s original achievements.

And actually it is a question that misses the point.  It may well be that improvement happens.  The point is that it is an approach that is polishing at best rather than transforming how we do things.  Things might be better but, systemically, we are not doing better things.

So, in health, is going lean going wrong?  Well, the service organisation leaders I work with are learning, just as Ohno learned in manufacturing, that a focus on relationships (the system) in service delivers levels of performance improvement that most people wouldn‟t dare dream of and would never be captured in a plan.  It fundamentally challenges preconceived ideas about the design and management of work in a way that I have never experienced or read about following the application of a lean approach.  And it delivers change across the system, not just the part being looked at, challenging the very authority of the command and control regime and the system of inspection, regulation and targets that stifle innovation and impede learning.  

This post is adapted from Seddon J, "Going Lean" First published in Management Service journal Winter

2011, volume 55, issue 4, pages 34 - 36