Lean Management Systems improvement begins by diagramming the what, when, and how of the current management system. We call this “Management Systems Diagramming” (MSD) and it consists of documenting the responsibilities, major tasks, schedule of requirements, meetings, control processes, communication methods, and organizational linkages.
Note: This process is more thoroughly defined and exemplified in the book:
Transforming Strategy into Success: How to Implement a Lean Management System, by George Shinkle, Reb Gooding, and Mike Smith published by Productivity Press Jan 2004.
The MSD process captures and documents the requirements, cadence, and alignment methods of the organizational management system:
What - Requirements
Management Responsibilities
- What are our management team responsibilities?
Major Tasks Schedule
- What are our major required activities throughout the year?
- What are the key milestones (business plan, budget, etc.)?
When - Cadence
Schedule of Reviews
- What reviews (approvals, critical evaluations, or information sharing discussions) need to be held to deliver our responsibilities?
- Which reviews require our participation to ensure we meet our obligations?
- How often are these reviews needed?
Meeting Schedule
- What meetings are required?
- What events drive the requirement for meetings?
- Which meetings are we expected to attend?
- What meetings do we need to call?
- Which meetings are called as needed and which are regularly scheduled?
- How do we make these meetings meaningful, effective, and efficient?
How - Alignment
Control Processes
- How will we ensure that our good intentions are fulfilled?
Communication
- How will we communicate to the organization?
Organizational Linkages
- What linkage and coordination with other parts of the organization need to be accomplished?
- What do we need to share, and with whom, across the organization?
- When is linkage communication required (prior--to gather inputs and approvals, or afterwards--to communicate results)?
The Management System Diagram is best when depicted in a one page view as shown below. The one page view allows the entire story to be seen at one time (exactly like the Toyota A3 report process).
Once the current state baseline is established, then the improvement process can begin. By injecting an understanding of lean concepts (waste, flow, speed, flexibility, and customer focus) an ideal future state management system can be envisioned where:
- Decisions are made instantaneously
- Approvals are granted at the moment they are needed
- Redundant activity and redundant communication are eliminated
- Error checking is not required
It is not likely that this ideal state will ever be completely realized, but from this ideal concept one can identify important issues and begin to design the desired future state management system that can and will be implemented.
In most management systems tremendous waste is observed ‘since they just evolve over time’ without the benefit of lean systems design concepts. Examples of the waste typically observed include:
- Lack of clear understanding of responsibilities
- Multiple meetings to address the same issues
- Unnecessary meetings
- Yearly calendars with most major activities “crunched into a short timeframe” rather than being paced
- Lack of advanced planning on known requirements
- Haphazard communication processes
- No connection between responsibility and action plans
- Too many control processes or lack of control processes
- Involvement in linkage and review meetings which were of limited value
- Processes that violate company policy
- Policies that drive significant unrecognized waste
- Control processes that cost more than the value of the controlled item
The majority of management systems have waste in the form of over control, under control, error prevention, redundancy, poor inter-group hand-offs, work that should not be done, and conflict. In our experience most management systems have between 50% and 90% waste. All of this waste cannot be easily removed but much of it can be. Recognizing that there is waste is the first step, and building the commitment to do something about it is the second and most difficult step.
In working with lean in management systems it will become clear that some activities do not exactly meet the traditional lean definition of customer value add but will not seem to be waste either – for example: advertising to build market share, negotiation training to collect higher prices from B2B customers, building a core competence for a new strategic thrust, etc. We developed the concept of “Business Value Add” to clarify that some activity is desired by another set of “customers” namely the stockholders. There are two value add definitions we use in management systems activity:
Customer Value Add:
Anything for which the customer is willing to pay
Activities which increase the value of the material or service being produced
Business Value Add:
Anything for which the stockholders want to pay
Activities that build desired long term business assets
A real life story:
In a recent MSD activity it was relatively straightforward to define this particular team’s responsibility. However, the company had just been reorganized and this team had evolved into being totally reactive to the point that even well known responsibilities like yearly business plans and budgeting activities seemed to be a total surprise. The stress level was extremely high and everything seemed to be in chaos….
The team had very little connectivity between responsibilities and actions to assure that the responsibilities were completed and completed well. They described it as open-loop control – tasks were passed out but were never followed-up. The lean assessment indicated that the managers were spending 60% of their time in correcting mistakes and fixing problems. They were also spending over 2 hours per day reading email --- over half was viewed as non value adding.
The Management Systems Diagramming process with lean concepts allowed the group to reduce the waste – freeing up approximately 20% of the managers time in less than two months. This group decided to simplify approval requirements, consolidate management reviews, minimize paperwork requirements, and use simple audits to assure procedures, processes, and responsibilities were being met. The group felt that they could achieve another 15 to 20% improvement within 12 months by refining several of the key systems and providing better direction to the organization(especially on email communications). This progress only occurred when they fully understood waste (and system level waste).
They also felt much better about the situation because they had developed a schedule and understood their calendar of requirements so they were much more in control and could prepare appropriately. By completing the management system diagram (along with some alignment and direction setting activity) the team was able to step out of the daily battle and design a management system which reduced waste and clarified the direction and the requirements for themselves and their organization.
In addition, once this management team internalized how much waste existed in their system, they began to drive waste reduction activity and flow analysis activity into the critical processes throughout all levels of the organization. We expect they will continue to make significant progress.
Summary
The purpose of the management system diagramming process is to understand and document how the organization approves, communicates, and controls the flow of people, money, material, and activities. This answers the fundamental question:
How do we run the business?
Management systems diagramming is only one of the simple, yet powerful techniques that should be used to build a Lean Management System. It appears very simple but it can be quite challenging to do in actual practice. (This level of thinking is difficult and many paradigms built up over a lifetime may need to be dispelled – so strong facilitation is highly recommended.) The MSD process has been successfully utilized at many different levels in organizations to increase the effectiveness and efficiency of functional groups, teams, and entire companies.
A Lean Management System reduces the waste of the valuable intellectual and managerial resources throughout the entire enterprise, allowing people to focus on strategically important and value-adding activity. Thus, improving our management systems will make our enterprises more successful in our challenging and competitive markets.
ABOUT THE AUTHOR
 George Shinkle (BSME – Purdue University, MBA – Ball State University, PE) is one of the founders of Direction Associates an international business improvement consulting firm.
George combines seven years of international consulting experiences with over 17 years of varied technical and management experiences gained while working for General Motors to provide a unique perspective on how to make organizations successful. He is recognized for his ability to provide support for strategic organizational alignment, lean management systems implementation, lean enterprise implementation, marketing strategy, program management, technology planning and implementation, product planning, quality improvement, and lean Product Development System improvements. He has worked with customers worldwide, and understands the unique needs of American, European, African, and Asian customers.
George was trained by Toyota to appreciate and understand the concepts of lean. He is experienced in the Toyota Production System; has directed technical, manufacturing, and commercial groups worldwide; has developed successful new technology products, has been awarded patents, and was recognized with the prestigious Kettering Award. He managed a $600 million global business. George can be contacted at gshinkle@directionassociates.com.
To read more about how to implement Lean Management Systems please see the book: Transforming Strategy into Success: How to Implement a Lean Management System by George Shinkle, Reb Gooding, and Mike Smith at http://www.productivitypress.com/ (the direct link for the book is: http://www.productivityinc.com/press/products/2997.html.) Also feel free to visit our website at http://www.directionassociates.com/.
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