The first five sections of the my working guide  Unleashing innovation in your organisation that will transform the way you use innovation.

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1. Understand the Barriers to innovation

Whilst we can never compare a small four-person start-up in San Francisco to a large government department or a multinational all of these organisations desire to be innovative.

For the small hungry start-up company working 80 hours a week, making innovation work is relatively painless as it is the only way they will survive. To the large multinational or the large government department the barriers to innovation are immense. The barriers include:

Institutional bureaucracy / lethargy being the default future A large part of the problem is that the default vision of the future, is the status quo.
Bogged down by firefighting Far too often talented resources are stuck in the revolving door.  The processes that need to be challenged are the very ones that absorb all the time meaning no change can happen.
Untapped ideas In so many organisations have talent staff live innovative lives outside their work environment. The key is to make a large organisation be as nimble as a small one.
Lack of understanding of magnitude of waste Whilst there is a basic understanding of waste few people would be able to categorise the eight wastes that Kaizen attempts to address.
Lack of abandonment Until an organisation embraces abandonment there is no hope for innovation.  We need to free time for innovation through embracing abandonment.
Aversion to risk / a fear of failure (80-85% of all new fast consumer products fail) Neilson 2018 The paradigm shifters make it clear that it is up to the senior management team to make it clear that failing fast is often a step to success.

2. Understand how the default future drives us

Steve Zaffron and Dave Logan have written a compelling book “The Three Laws of Performance” that explains why so many of these initiatives have failed.  The first law is “How people perform correlates to how situations occur to them.” The writers examine the concept that the organisation’s “default future” which, we as individuals just know in our bones, will happen – will be made to happen. Thus, in an organisation with a systemic problem, the organisation’s staff will be driven to make initiatives fail, so that the default future prevails.

Daniel Goleman, of emotional intelligence fame, points out that the subconscious is a very primitive part of the brain, one that has not evolved for more than 100,000 years. If you place visions in your subconscious, it will work away at them and guide you in your waking hours towards those outcomes. Tony Robbins’ YouTube video The Magic of Visualization (Law of Attraction) Rhonda Byrne’s book “The Secret” and John Kehoe’s “Mind Power” explain further the power of positive thought.

Zaffron and Logan went on to say, “If you do not change the default future belief the more you change the more you stay the same”.  The key to change is to recreate, in the organisation’s staff minds, a new vision of the future, let’s call it an “invented future”.  More of this later in the selling change section.

3. Realise COVID 19 is the Perfect Storm

Never has there been a better time to unleash innovation in your organisation. There is a perfect storm that offers: an unprecedented amount of talented and entrepreneurial young people; accessible technology- many of it for free; and a colliding of ground-breaking knowledge which gives us a clear route forward. With the added advantage of customers who are accessible, around the world, because they are only a few clicks away from ordering.

4. There are two types of innovation:

  1. Gemba Kaizen innovation which focuses on continuous improvement (Kaizen) in the workplace (Gemba).
  2. Blue ocean shift innovation where an organisation moves away from the cut-throat, bloody red oceans of competition to the clearer, calmer and rewarding waters.

This working guide will penetrate into the great work of Jeffery Liker[i], The Toyota Way, Masaaki Imai author of Kaizen and his follow-up book Gemba Kaizen  and show you how you can move towards Toyota’s amazing achievement of 10 innovations, per employee, per year, worldwide.

The working guide will also go into the brilliant work of W. Chan Kim and Renee Mauborgne authors of Blue Ocean Strategy, and their follow-up book, Blue Ocean Shift. 

The great paradigm shifters, Peter Drucker, Tom Peters, Jack Welch, Gary Hamel have also talked, for some time, about the significance of innovation and how to increase your odds of success. The key lessons are extracted and listed for easy absorption.

A major change of culture requires an understanding of the psychology of selling and leading change. John Kotter’s eight step “selling and leading change” process have been further enhanced with Zaffron and Logan’s Three Laws of Performance that offers a more in-depth look at the psychology of change.

5. Understanding Gemba Kaizen Innovation

The important use of Gemba “the real place” in front of Kaizen reminds us that we need to start in the operations.  Kaizen stands for continuous improvement. The ten basic rules for practising Kaizen in the workplace were listed by Masaaki Imai in his book Gemba Kaizen[ii] see Exhibit 3.1.

Exhibit 3.1:  The ten basic rules for practising Kaizen

Challenge the old Abandon conventional rigid thinking about how things should be done
Think of how to do it, not why it cannot be done
Question and abolish old, traditional concepts
Just do it Do not seek perfection – do the improvements now
Correct mistakes immediately
There is no need to spend money on Kaizen
Use the wisdom of the crowd and research problems deeply Wisdom is brought out when faced with hardship
Find the root cause of a problem by asking 5 Whys
Seek the wisdom of ten people rather than the knowledge of one
Never stop once started Opportunities for Kaizen are infinite

Challenge the old

Past processes need to be constantly challenged to ensure they are relevant for current and future operations.

Importance of Peter Drucker’s Abandonment

From the time we were at kindergarten we have had a fear of ever admitting we were wrong.  If I was to go into a reader’s garage what would I find?  Maybe an exercise machine that started off life in great excitement as we envisaged a leaner me.  After a couple of weeks in the lounge it started its inexorable journey to the garage.  There to rest under the dust cover for a day in the future when we would use it again, so we could say “I told you so.”

In the world of commerce this trait is equally damaging.  We will hold on to systems, keep going with projects, keep writing that report that nobody reads because to remove it would mean a loss of face.  Let’s get over it.

Management guru Peter Drucker who I consider to be the Leonardo de Vinci of management, frequently used the word ‘abandonment’. I think it is one of the top 10 gifts Drucker gave us all. He said,

“Don’t tell me what you’re doing, tell me what you’ve stopped doing.”

“If leaders are unable to abandon yesterday, they simply will not be able to create tomorrow”

“Without systematic and purposeful abandonment, an organization will be overtaken by events. It will squander its best resources on things it should never have been doing or should no longer do. As a result, it will lack the resources needed to exploit the opportunities that arise”

An organisation that embraced Peter Drucker’s abandonment earmarked the first Monday of every month for “abandonment meetings at every management level.” Each session targets a different area so that over the course of a year everything is given the once-over. This process would work well in the finance team except we should meet once a week to discuss at least two abandonments.

The act of abandonment gives a tremendous sense of relief to the finance team for it stops the past from haunting the future. It takes courage and conviction from the CFO.  Knowing when to abandon and having the courage to do so are important leadership attributes.

I have included in the electronic media a book review of Elizabeth Haas Edersheim’s The Definitive Drucker[iii]. Read the book for more on abandonment and other great advice. I consider this book one of the top 10 management books I have read. I hope, like me, you will be become a follower of the great Peter Drucker.

The Importance of Challenging The Status Quo

In an interview, called “The Lost Interview”, Steve Jobs, was asked, “As a 22-year-old worth $10m, and a 25-year-old worth $100m, how did you get your business acumen?”  He said that over time he realized that most business was pretty straight forward.  He talked about when Apple had its first computerized manufacturing plant for the Apple II and the accountant sent Steve Jobs his first standard costing report.  Jobs asked, “Why do we have a standard cost and not an actual cost?” The response was “That is the way it’s done”. He soon realized that the reason was the accounting system could not record an actual cost quick enough. When that was fixed, standard costing reports vanished.

In business Jobs believed that few in management thought deeply about why things were done.  He came up with this quote which I want to share with you. I believe it should be on every wall and in front of every work station in the finance team work area.

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped into living with the results of other people’s thinking.  Don’t let the noise of other’s opinions drown your own inner voice.” Steve Jobs

I believe this quote should be on every wall and in front of every work station in the finance team work area.

Just do it

Nike utilised the phrase “Just do it” in a very successful marketing campaign.  With a commitment into training staff about kaizen much progress can be made with little further investment.

The great paradigm shifters featured in the later section all emphasize the importance of piloting rather than writing proposals. Thus, quickly testing assumptions with targeted customers and failing fast and moving on where necessary.

Use the wisdom of the crowd and research problems deeply

James Surowiecki wrote that “a large group of people are often smarter than the smartest people in them.” Hence the term “wisdom of the crowd was born” . In other words, a group’s aggregated answers to questions that involve quantity estimation have generally been found to be as good as, and often better than, the answer given by any of the individuals in the group. Involving a “crowd” in innovation will have a major positive impact on the process.

HOT Tip

Use the five whys rule to get to the heart of the problem

Six sigma and Toyota have adopted “The five whys” to get to the root cause of a problem. It is like peeling the layers off an onion.  To each answer to a why question you then ask, “Why is that?”  The rule states that by the fifth why you will have located the real problem, and if rectified, a permanent benefit will flow back to the organisation.

Never stop once started

The ultimate goal for Kaizen is to match what Toyota have achieved.  Ten innovations per year from every employee, in every country.

6. The four foundation stones for Kaizen

There are some foundation stones in Kaizen that should be adopted.

  • Muda (waste) elimination
  • Housekeeping
  • Visual management
  • Adopting Time Saving Techniques ( Adopting SCRUM meetings from the agile movement and value stream mapping)

1. Waste (Muda) elimination

There are three steps in waste elimination.

  1. Understand the eight wastes and identify examples of each of these eight wastes in your operation.
  2. Post-it sticker re-engineer your main processes where they will be some easy wins
  3. Learn how to perform value stream mapping and apply it to all main processes.

The Eight Wastes that Need Tackling

In lean methodology, there are eight types of waste.  These wastes are seen within the whole organisation. I have outlined the eight wastes below in Exhibit 4.1

Exhibit 4.1: The eight wastes that need tackling

Eight types of waste Reasons why the waste occurs
Over-production: Building batches of products larger than the customers’ immediate need. This waste typically occurs because we want to increase utilisation of large and important machines, are worried about rejects and absenteeism so we produce more to be on the safe side. In just-in time systems being ahead of the production schedule is regarded as worse than being behind it.
Waiting: Production operators waiting because a machine has gone down, or a component is not available. Or when the operators are simply monitoring the machine as it does its value adding task. Whilst operators being idle is easy to measure, it is more difficult when they are looking busy. In one example in a German automotive manufacturer, the set-up time in the press shop was reduced from 10 hours a week to 3.5 hours.
Transportation: Moving materials around the factory. Any process that is physically distant from the main line should be incorporated into the line if possible. Masaaki Imai points out a common sign of a problem with layout is the need for conveyor belts. He goes on to say, “The best thing a company can do with its conveyor belts is to sell it to their competition, or send it to them free of charge.”
Extra processing: Processes that appear productive but are unimportant to the customer. Value stream accounting provides good guidance here. Do not include any costs and activities that do not add value to the customer.

 

There are many ways an  organisation can have extra processing.

  • Monthly reports that are prepared for accountability purposes but are not read or used by the recipient.
  •  The majority of Excel spreadsheets that are a reprocessing of already recorded transactions.
  • The chart of accounts where it holds more than 50 codes for the P/l
  • Annual planning processes that take months and are useless as soon as the ink has dried.
  • Designing additional features into a product that the customers do not use e.g. many features in Excel are not used.
Excess inventory: Having materials, components, work-in-process, and finished goods levels above the immediate need. When an inventory level is high nobody gets serious enough to deal with problems like quality, machine downtime, and absenteeism, and thus an opportunity for Kaizen is lost.

Also, with generally accepted accounting principles all finished goods carry prior months’ overheads into the future periods these goods were sold.  Carrying forward  costs to future periods leads to additional costs hitting the P/L when inventory levels fall.

Waste of motion:  Any motion of a person ‘s body not directly related to adding value is unproductive.  While very evident in manufacturing environments it is of equal importance in all other environments.

 

 

I recently witnessed a classic waste of motion activity in a hospital.  I was in the  the emergency department of Wellington’s largest hospital and my wife was having her blood pressure read.  Because my wife’s records could not be brought into the room the nurse, who was wearing protective gloves, had to write the temperature down on a scrap of paper and then transfer it to the file when she returned to her work station.

There are many ways an organisation can have a waste of motion

  • Disorganized employees who do not have all their tools with them on a site visit
  • Health workers double handling patient information
  • Office workers who cannot access previous work files efficiently

 

Waste due to rework and rejects that have to be scraped: Rejects interrupt production and require expensive rework (processing again to correct faults) or have to be discarded. Reports that have to be rewritten are effectively rework.
Unused employee creativity: Employee ideas having to hurdle many obstacles before adoption and therefore not being raised. Based on Toyota, we would need to have 10 innovations implemented per team member per year before we could say there is no waste in this area.

 

While some of these types of waste, appear at first sight, to only be relevant to manufacturing you can apply many of them into other sectors.  Since, as Dr Jeffrey Liker points out, “Most business process are 90% waste and 10% value-added work” there is a lot of scope in this area.

Post-it re-engineer your main processes

Re-engineering can be a complex or a relatively easy task—the choice is yours. Many organisations start off by bringing in consultants to process map the existing procedures. This is a futile exercise; why spend a lot of money documenting a process you are about to radically alter and when it is done only the consultants will understand the resulting data-flow diagrams?

2. Housekeeping

Housekeeping is a surprising start to creating a new waste free process but one that is emphasized in all the case studies in the book[i].  The benefits of housekeeping are that it highlights problems, helps ensure everything is where it should be thus saving time, and brings teams together.  Japanese organisations are known to start the day with a 15-minute tidy up where all teams work together both in and outside the premises. In a western culture this needs to be explained as the default future for all the staff is “Cleaning is the task for the cleaners”.  Its significance is that it can be where 50% of the errors occur.  There are five Ss in Gemba Kaizen:

  • Sort: determine what is necessary and unnecessary and dispose of the latter.
  • Straighten: Put essential things in order so that they can be easily accessed.
  • Scrub: Clean everything, tools, workplace
  • Systemise: set the standard, train and develop staff to follow procedures
  • Self-discipline: maintain a culture where self-discipline comes to the front.
HOT Tip

Practical steps to embrace sorting (The Red ticket day)

  1. Select an area in operations and hold a training session on Gemba Kaizen delivered by a local kaizen trainer.
  2. All staff, after the training session, are given red tags to place on all items that will not be used in the next 30 days. The rule being if in doubt red tag it.
  3. For those items that operations staff want stored in their area they have to demonstrate the necessity back to the group. Those hoarders will thus be challenged, and a compromise reached.

“At one company a red-tag campaign unearthed enough supplies for 20 Years”  Masaaki Imai, Author of “Gemba Kaizen”

Practical steps to embrace straighten

I will never forget visiting the garage of one of my friends.  His dad had all his key tools hanging above his workbench with a stencil outline on the wall to show what tool was not back in its right full place.

Hospitals are particularly good at this as lives depend on it. During my visits to see my wife, who was in hospital for 105 days, I was impressed with the organisation of the blood extraction trolleys, nurses knew that everything was in its place.

In hospitals sensitization is very important.  Having a hand cleaner dispenser empty is of no use. So, they have a sticker on each unit which says, “Turn me over if empty”.  The label when turned over is red   and says “EMPTY”.  That is straightening at work.

  1. Set out specific places where tools and supplies should be.
  2. Label all areas where work in progress is placed, indicating the maximum permitted level

Practical steps to embrace scrub

When one cleans one’s car, the old-fashioned way with car wash and a soft bristle brush you get up and close to your car. It’s then you notice that your offspring have damaged your alloy wheels by poor parking manoeuvres, you have a nail in your front right tyre, and a chip on your window screen.

  1. Make it a team exercise and have all staff including the executive team involved.
  2. Institute a clean desk policy every night. Papers left on the desk having to be collected from the CEO’s personal assistant.

“At one company, while cleaning thick layers of dust, the finance director discovered naked electrical wires running along the walls.  The vinyl cover had long since deteriorated. He marvelled at the fact that a fire had never broken out in the plant.”

Masaaki Imai, Author of “Gemba Kaizen” Gemba Kaizen

Before clean-ups can be a successful activity it is important that you organise training in Kaizen so that staff can understand why “Scrub” is so important.

Practical steps to embrace “systemize and self-discipline”

I have never seen an exceptional work place that credited its success on written policies and procedures. The key has been a common understanding and commitment to them from the top down.

  1. Have a weekly exception report that highlights the best and worst performers with Sort, Straighten, Scrub.
  2. Systemize also has a benefit in safety.

3. Visual Management

Toyota is famous for its “andon cord” if problems occur. Andon refers to the pull cord where any worker on the production line can stop production, and ask for help, if they see a fault that cannot be fixed by them or the next set of workers. If left unattended, the fault will be covered up by a panel.  Immediately lights flash and that part of the production line is halted.  The workers below are unaffected as there is a feed in line with about eight minutes of product in which to work. Trained engineers rush in and fix the problem within the eight-minute time frame.    The ability of anyone to stop production and activate the flashing lights to get the roaming engineers to the spot quickly is a major advantage Toyota and other manufacturers have when using this visual control.

Visual control is an important principle for the finance team to master as many reports require the skills of a rocket scientist to read them.  Whereas if we adopted this Toyota principle we would make:

  • All reports so clear that nobody needs to ask questions about them – I call it passing the 14-year-old test
  • Use some sort of “and on cord” like a “red cone” so staff, within the accounting function, can signal that they are having a problem that might delay an accounting process, at month-end / annual planning/ annual accounts
  • Use of staff notice boards, screens in canteens to report progress

Kanban boards

Here we need to adopt visual control techniques that are part of the lean or agile movement. Creating a Kanban board to visually manage your work is a great way to increase your overall effectiveness and efficiency. Kanban is also a great way to in still a sense of accomplishment among a team. Let’s take a look at why this is the case.

A Kanban board is a visual process and project management tool that helps teams organize and manage their work. Kanban boards allow teams to visualize their work and understand what is going on at a glance. Using note cards or sticky notes to represent work items, you can show any sized body of work such as a project (involving numerous tasks) or a task (usually involving only one person). Different colours are for different staff or work groups. The whiteboard is divided into three columns to represent backlog (to do), doing, or done. A small box is also set up for any processes that are stuck, as shown in Exhibit 4.6.

Kanban boards visually show the work in progress. This way, everyone is kept in the loop and WIP is keep to a minimum. Kanban boards work well for any type of work. It’s so flexible that you can start with whatever process you already have.

The Kanban method uses a pull system. Instead of trying to do 10 things at once, manage your personal tasks by “pulling” in new work only when you have completed the current work.

Kanban boards show a team’s accomplishments. Have you ever had a hard time explaining to your boss what you’re working on because you have so many things on your to-do list that you don’t know where to begin? By showing your boss the Kanban, they will instantly see all of your work and understand your workflow.

A common misconception is that doing several tasks at once can save time. This is a myth, although millions of people every day try to juggle their work so they can “feel” productive. Yet in reality it leads to stress and inefficiency. A Kanban board can help you keep tabs on your tasks-in-hand limits e.g. the maximum number of tasks that any one person can be working on at any given time.

While limiting work in progress may sound counterintuitive, it can actually increase effectiveness and efficiency. By allowing team members to focus on a limited number of tasks at once (usually no more than three), less time is wasted in task switching, or the act of switching from one task to another. Task switching consumes not only time, but mental energy in the act of constant of juggling priorities.

It should be obvious that finance teams need to use a Kanban board throughout the month.

A Trello board is a list of lists, filled with cards, used by you and your team. Trello is a task management app that gives you a visual overview of what is being worked on and who is working on it, see Exhibit 4.7.

Exhibit 4.7 Showing how a Post-it Kanban board would be seen in Trello.

Trello creates a system that allows for individuals or teams to track a project and collaborate or contribute where they can be most useful or where it is most needed.

For how we effectively use Trello for project management, visit https://wpcurve.com/trello-for-project-management/

4. Adopting Time Saving Techniques

There are a number time saving techniques worth adopting

  1. SCRUM meetings from the agile movement
  2. Value stream mapping

SCRUM meetings from the Agile movement

Scrum meetings are stand-up 15-minute project update meetings held first thing each morning, where team members are asked to talk about:

  • What they did yesterday on the project?
  • What are they doing today on the project?
  • What are the barriers to progress?

The debrief, for each team member, is to take no more than a minute or so. Some teams even have a dumbbell weighing 5-10kg to be held out horizontally, with the weaker arm. The rule being you can only talk as long as you can hold the weight horizontally. At the end of the session, the group ends the session by bumping fists, a homage to the source of this technique.

The manager, renamed the scrum-master, notes all the roadblocks and immediately sets about removing them with an appropriate phone call or walkabout: “Pat, will you please make time this morning to see my corporate accountant? I understand Sam has being trying, for the last few days, to meet you. This is now holding up the ___________ and the CEO and ______will soon be on my and your back if we cannot resolve the issue today.”

This scrum stand-up meeting does many things: it replaces loads of emails, as the team members get to know what has been done and what is going to be done and by whom. It makes everyone accountable. There is no place for a cruiser.

Visit Jeff Sutherland’s YouTube presentation to understand more details. The following presentations will help you to understand more about this great technique. Search “scrum + Jeff Sutherland” on YouTube to learn more about the history of scrum, how and why to use it.

HOT TIP

Scrum meetings can be used in innovation in the following ways:

  • Holding Abandonment scrum meetings, once a month, see abandonment section for how to run the monthly meeting.
  • Holding New Ideas scrum meetings weekly to begin with then fortnightly

Value stream mapping

Value stream mapping is a great process to pin point waste. It is like flow diagram except that you focus on:

  • Tasks that are non-value adding – the customer does not want them and they are part of the eight wastes as all ready discussed.
  • Waiting time is separately identified, from the actual processing time for each task
  • Tasks that have to be performed as they are mandated by regulation
  • Tasks that add value to the customer

Value stream mapping should be undertaken on all processes that you have already reduced through the simple process of post-it re-engineering. At first, I recommend that you start with Jay Arthur’s simple post-it sticker process, as you will have the

HOT TIP

stickers already.  Visit https://www.youtube.com/watch?v=3mcMwlgUFjU

As you get more serious you can get further training, so you are able to utilise specialist software to further reduce unseen waste.

7. Learn how to Implementing a Blue Ocean Shift (BOS) Innovation

8. Learn how to use the five steps of the BOS

9. Learn how to sell and Leading Change

10. Learn from the great management thinkers

To read more purchase the working guide Unleashing innovation in your organisation that will transform the way you use innovation.

 

 

[i] Masaaki Imai, Gemba Kaizen: A Common Sense, Low-cost Approach to Management,  (McGraw-Hill 1997)

[i] Jeffrey Liker “The Toyota Way McGraw-Hill; 2003

[ii] Masaaki Imai, Gemba Kaizen: A Common Sense, Low-cost Approach to Management,  (McGraw-Hill 1997)

[iii] Elizabeth Haas Edersheim, The Definitive Drucker: Challengers for Tomorrow’s Executives — Final Advice from the Father of Modern Management, McGraw-Hill, 2006.