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Group Health wows crowd at lean conference

June 11, 2010

A delegation from Group Health stole the show here at LEI’s Lean Healthcare Transformation Summit with a demonstration of their lean management reporting process.  Rather than presenting a drab slide show, the folks from Group Health essentially pulled three “andon boards” off their walls in Seattle and Burien, flew them to Orlando and gave a live demonstration.

Group Health clinics have three levels of reporting: tier one is at the unit level, tier two is at the clinic level and tier three is at the corporate level.  So, each day, unit team members gather around the tier one board to review the previous day’s observations.  [Note: If I convey any of these facts incorrectly, I hope someone from Group Health will set me straight.] 

Tier one observations relate directly to patient care, right on the “shop floor,” so to speak.  Work is standardized at each level, so any deviations from standard at the unit level mean patients are not receiving adequate care.  Incidents of substandard care, essentially “defects,” are discussed among the nursing team and lean techniques are used to understand the problem and devise a solution to prevent the defect from occurring again.  Examples of lean techniques may include A3 problem solving or root-cause analysis.

Periodically, the unit manager meets with the clinic chief at the tier one board to discuss events of the past period.  The board is arranged so areas where work is proceeding according to standard are green and deviations are indicated in red.  The presentation is simple, clean and low-tech.

A Group Health andon board in the wild.

Similarly, key metrics at the clinic level are arranged on a tier-two board maintained by the clinic chief.  At the conference, clinic operations manager Alicia Eng gave her tier one presentation to clinic chief Wellesley Chapman MD and he, in turn, gave his tier-two presentation to primary care assistant medical director Paul Fletcher MD.  You could clearly see how managerial work is standardized; coaching occurs at each level; problems are addressed at the source; and information directly relevant to patient care moves up and down the organization.

The exchange between Dr. Chapman and Dr. Fletcher was particularly insightful, thrilling and, at times, painfully realistic.  It was as if they postponed their regular Monday meeting in Burien and conducted it onstage in Orlando on Wednesday instead.  Afterwards, I asked Dr. Chapman about this and he said he and Dr. Fletcher prepared some topics in advance but that the conversation was real and, in fact, Dr. Chapman walked away with a fresh list of to-dos based on the onstage conversation with his boss.

The next day, at lunch, I overheard a conference-goer say that one 20-minute “role-play” by the Group Health team was worth the price of admission.  Indeed, Alicia Eng, Wellesley Chapman, Paul Fletcher and Lee Fried should be congratulated for their much-appreciated contribution to the conference.

A chat with James Womack

June 9, 2010

RK2 is well-represented at the Lean Enterprise Institute’s first annual Lean Healthcare Transformation Summit, happening now in Orlando, Florida.  Although it’s a balmy 92 degrees here in Disneytown, we’ve been sequestered in chilly air conditioned conference rooms for days.

Although he wasn’t expected to attend, Jim Womack is here, filling in as master of ceremonies and providing his incomparable perspective.  Jim, of course, is the co-author of The Machine that Changed the World and is the leading American voice of lean management.

I was pretty thrilled to chat with Dr. Womack and took the chance to ask about the origin of the term “lean,” a topic I covered in a previous post.

As Womack explains it, the term was coined in 1987 during a white board session in Jim’s office at MIT with “seven or eight” folks including John Krafcik and John Paul MacDuffie.  MacDuffie was fairly attached to the term “fragile,” a word used by a colleague translating from Japanese.  Of course, John Krafcik used the term in his early papers, as well.  However, it was pretty clear the term “fragile” wasn’t going to catch on with business managers.

The group assembled around Dr. Womack’s white board thought about an earlier production system pioneered by Henry Ford (“channeling Hank” as Jim puts it).  Observers at the time called his system of mass production “Fordism.”  Henry Ford preferred “flow.”  Afterall, that was a key attribute of the system.  Materials flowed continuously on the assembly line.

Jim Womack

So what does one call the production system pioneered by Toyota?  Toyotaism?  Japanism?  Those are words you use when you don’t have a clear understanding or theoretical framework.  “Fordism” is what Henry Ford did, whatever that was.  Mass production, flow production.  Those are more descriptive, specific terms.

“What is the key attribute of the Toyota production system?” Jim asked the group.  Many of the ideas revolved around the concept of doing more with less.  Less inventory, less shop floor space, fewer workers per unit.  John Krafcik proposed the term “lean” and that’s what they went with.  But, Womack said, lean still doesn’t perfectly capture the essense of the production system practiced by Toyota and others.

Asked what name he would have used if he could re-name it today, Womack said he doesn’t re-live the past.

NUMMI, we knew ye well (but GM didn’t)

April 1, 2010

Today marks the last day of a bold experiment in lean manufacturing.  New United Motor Manufacturing, Inc. (NUMMI), the joint venture between Toyota and General Motors closed for good on April 1, 2010.

When I visited in October 1989 as part of my academic research in lean manufacturing, NUMMI was indeed an experiment.  Large numbers of academics and industrial engineers studied NUMMI and their findings, shared with the world, aided the spread of lean manufacturing in the English-speaking world.

(Personal note: Shortly after my visit, I bought one of NUMMI’s products, a 1990 Geo Prizm, and drove it for 17 years.  The car was still running well on the day I donated it to my local public radio station.)

Credit: CanadaGood via Flickr

For General Motors, NUMMI was a giant missed opportunity.  They had a front-row seat from which to observe the Toyota production system for 26 years and, frankly, they squandered it, much to their detriment.  Ford didn’t have the same luxury and yet they are now well on their way to transforming their operations to compete with the best in the world.

Overall, NUMMI will be remembered as a success.  It demonstrated, for anyone who still doubted, that lean manufacturing wasn’t a Japanese cultural trait but rather an integrated set of production methods that could be implemented anywhere by anyone.

It established Toyota as a North American manufacturer.  It’s possible some will regard this as a net negative, an invasion of sorts.  Indeed, when Toyota and others began exporting increasing numbers of vehicles from Japan to the North American market, it was regarded by many as an invasion; and the resulting political pressure led to voluntary import quotas.

However, a business model where vehicles are built on one continent and shipped to another is not sustainable in the long-term.  The nature of automobile manufacturing is such that it can only succeed when makers develop engineering, marketing, manufacturing and a full supply chain on the continent where vehicles are consumed.

So, rather than providing a foothold for an invading power, NUMMI was the first step in developing a renewed auto manufacturing sector in the United States.

Ironically, NUMMI’s closure could be considered the second step in this renewal — the rationalization of production.  As is clear from this excellent, if slightly dated, information graphic by the New York Times, auto manufacturing in the United States is clustered in a relatively tight corridor between the eastern Great Plains and the Appalachian Mountains.

Due to its remote location, NUMMI never implemented true just-in-time delivery throughout its supply chain.  It depended on deliveries of components and assemblies from Japan and elsewhere.  The other outlier on the New York Times graphic is the General Motors plant in Wilmington, Delaware.  Located on the eastern side of the Appalachians, it closed on July 28, 2009.

NUMMI will be remembered alongside Ford’s Rouge plant and Toyota’s Takaoka plant as one of the most influential manufacturing facilities of the industrial age.

The etymological origin of lean

March 8, 2010

Most things exist long before they are given a name.  Lean is no exception.  I’m not talking about the 12th century Old English word hloene, later Middle English lene, which our friends at Merriam-Webster define as “deficient in flesh” or “containing little or no fat”.  I’m talking about a more recent coinage, referring to that revolutionary production system pioneered by Toyota.

The year was 1989, Madonna’s Like a Prayer was topping the Billboard charts and I was writing my thesis at Reed College on the use of lean production management by Japanese auto manufacturers.  Back then, lean, an elegant term that economically describes Toyota’s preeminent industrial achievement, was not in wide use.  Had it been, perhaps my thesis title, Industrial Relations and Production Management in the Japanese Automobile Industry: The Case of Transplants, would have been shorter.

In fact, it is well known that lean was coined by John Krafcik in his 1988 Sloan Management Review article “Triumph of the lean production system.”  It is less well known that Krafcik adopted the term late in his academic career.  In his early academic papers, including “Learning from NUMMI” (1986 ), an internal working paper of MIT’s International Motor Vehicle Program, through his 1988 MIT masters thesis, he didn’t call it lean.  He called the production system used by Toyota and a small number of other Japanese automakers fragile.

So, when did it change from fragile to lean?  And why?

In The Machine that Changed the World, the book by by James Womack et. al. that introduced lean concepts to a broader audience, the authors use the term fragile only once:

…Lean production is fragile.  Mass production is designed with buffers everywhere — extra inventory, extra space, extra workers — in order to make it function.  Even when parts don’t arrive on time or many workers call in sick or other workers fail to detect a problem before it is mass produced, the system still runs.

The term fragile, while not terribly inspiring, made sense.  In Krafcik’s early papers, he was drawing a distinction between robust manufacturing — the kind practiced by General Motors and others, characterized by large buffer inventory stocks, long production runs between die changes, vast factory floors and a high degree of specialization among factory workers — and, essentially, its opposite.

In contrast, Toyota’s approach to manufacturing does indeed seem fragile.  Inventories arrive just in time, so one slow delivery or one bad batch of parts and the whole factory can shut down.  Making the system work requires flexibility on the part of factory workers.  Flexibility requires investment and that investment can be easily lost if an economic downturn precipitates layoffs.  The whole thing seems on the verge of collapse.

To resolve the question, I contacted Glenn Mercer, Director of MIT’s International Motor Vehicle Program (IMVP) and he very generously conveyed my etymological query to John Krafcik, now President of Hyundai Motor USA, and John Paul MacDuffie, another influential researcher who is now Associate Professor of Management at Wharton.

The answer from Mr. Krafcik and Mr. MacDuffie, as encapsulated by Mr. Mercer, was “The Japanese guy I was working with translated the Japanese words as fragile and robust.  When we discussed our work with American managers they reacted negatively to fragile, so we dreamed up lean.”

So there’s your answer.  Clearly, calling a production system fragile, though accurate in many ways, is no way to sell others on its merits.  Without this re-branding, would lean production have gained acceptance in the English-speaking world?  I like to think fragile production would have succeeded on its merits but it likely would have struggled in the marketplace of ideas.  You can use a name like Smuckers to sell jelly but management concepts are another matter.

[Note: Sincere thanks to the IMVP for permission to use Mr. Krafcik’s internal working paper in this post.]

Harborview raises a bundle, Ballmer jigs to Mustang Sally

February 28, 2010

The grand ballroom of the Sheraton Seattle Hotel was packed to the gills yesterday in support of Harborview Medical Center.  The 18th Annual Salute Harborview Gala drew a capacity crowd of local luminaries that included Microsoft CEO Steve Ballmer, PEMCO Insurance CEO Stan McNaughton and King County Executive Dow Constantine.

According to Harborview Executive Director, Eileen Whalen, the medical center raised nearly $2 million for uncompensated care yesterday.  An impressive sum.  Owned by King County and operated by the University of Washington, Harborview provided $155 million in charity care in fiscal year 2009, more by far than any hospital in the state of Washington. 

While the sum raised yesterday is truly substantial, it’s sobering to realize it covers the cost of about five days’ worth of charity care.

Whether you are a billionaire or a welfare recipient, Harborview provides the same exceptional level of care to all who pass through its doors.  It is the only Level 1 adult and pediatric trauma center serving a territory comprising 30% of the U.S. land mass.

KOMO anchor Molly Shen was mistress of ceremonies at the event, serving ably in that role for the past several years.  The organizers did an excellent job as always with my only suggestion for improvement being the sound system.  Pearl Jam’s recent concert at Key Arena was easier on the ears.

Back in 2006, Stan McNaughton accepted Harborview’s Mission of Caring award on behalf of PEMCO Insurance and he has been a generous contributor to Harborview and other institutions over the years.  I had a chance to chat with Mr. McNaughton several years ago at an event at Seattle University.  I walked away thinking he was a fun and engaging fellow, not learning who he was until later.  When I asked what he does for a living, he said, without elaboration, “I work for an insurance company.”  It’s an approach consistent with PEMCO’s popular “We’re a lot like you, a little different” series of advertisements.

This is the first time I have spotted Mr. Ballmer at this event and he gave generously, raising his paddle to the tune of $50,000.  Tentative at first on the dance floor, the Microsoft CEO started to groove when Harborview house band The Frustrations launched into a faithful rendition of “Mustang Sally.”  Fortunately, Steve’s performance was significantly dialed back from one he delivered several years ago.

Biden talks economics, Inslee charts course for healthcare reform

February 12, 2010

Vice President Joe Biden visited Seattle this morning for a breakfast gathering at the Westin Hotel.  He took the stage alongside United States Senator Patty Murray to reflect on the past year and look ahead to 2010.

Vice President Joe Biden speaking with attendees after breakfast

While the Vice President discussed healthcare reform briefly, his main topics were economic issues: mainly the administration’s efforts to avert collapse of the global financial system early last year and their current focus on jobs and economic development.  If Mr. Biden knew the administration’s plans for healthcare reform, he wasn’t talking, except to say that it, along with leadership on the environment and green technologies were vital to support economic security for middle class Americans.

Back when Governor Tim Kaine visited Seattle for a much smaller gathering, healthcare legislation was actively moving through Congress and the Governor expressed optimism that President Obama would be listing it as an accomplishment at his State of the Union address.

The one speaker at this morning’s event to chart a course for healthcare reform was Representative Jay Inslee who stated emphatically that the bills passed by the House and Senate late last year would reach the President’s desk via reconciliation with a simple majority vote.  He challenged the newly minted senator from Massachusetts, who won his seat with 52% of the vote, to insist upon a 60% vote in the Senate to pass reform.

I should note that Democratic members of the House tend to speak more boldly about modifying rules and traditions of the Senate than do the senators themselves.  But time will tell.

As you would imagine, security was tight at the event.  At the entrance, I was wanded in ways I have never been wanded before.  Here’s a snapshot of police motorcycles lined up under the Monorail preparing to lead the Vice President’s motorcade back to Boeing Field.

Police vehicles lined up under the Seattle Monorail preparing to escort Vice President Joe Biden's motorcade

RK2 thanks friends, Flat Stan crashes

January 13, 2010

Starting a new firm in the deepest depths of the greatest recession since the term “recession” entered common usage is daunting.  Fortunately, we’ve had incredible support and encouragement from friends and colleagues, without whom this venture would not be possible (and certainly not as fun).

So, as our way of saying thank you, RK2 threw a party on Friday, blowing our entire annual marketing budget in the very first week.  (If you notice us conserving business cards in December, you’ll know why.)  Several dozen friends of RK2 gathered at the Big Picture in Belltown where we closed the book on 2009, our first partial year in business, and greeted 2010 with renewed optimism.

Guests overcame numerous obstacles to attend.  First and foremost was slow (and, in some cases, non-) delivery of invitations.  The U.S. Postal Service does a much better job delivering mail than I could myself, so I have no business complaining, but it’s clear the holiday rush didn’t help us get the word out.

Second was the torrential downpour that enshrouded Seattle in a damp, dark, drenching deluge.  Then there was the impossible parking situation.  And, finally, an inconvenience inadvertently inflicted by me: invitations with the wrong address.  Clearly, I should relinquish my proofreader’s credentials.  (I am currently in the process of buying lunch for each and every person I sent to Second Avenue instead of First).

Photo courtesy of Keith Officer

In spite of all that, we did have one uninvited guest.  I’m talking about Flat Stanley, pictured above.  Though not on the guest list, he was, without a doubt, the hit of the party.  However, being two-dimensional, and a bit of a lightweight, he would be wise next time to steer clear of the bar.

Sarbanes-Oxley greeting cards: the final installment

January 6, 2010

Well, it’s time to make my final contribution to the vast canon of humor inspired by the Sarbanes-Oxley Act of 2002.  What more can one contribute to the Sarbanesian oeuvre?  Haven’t the late night comedians already dissected every clause of this hilarious piece of federal legislation?  Possibly.  Nevertheless, I humbly submit two more greeting cards.

This first one is a get-well card.  In those early days performing 404 audits, what audit staff person didn’t feel like tunneling their way to freedom?

Too bad about Ned.  He should have used salvaged monitor stands to build a support structure in his tunnel.

It’s not that time of year but it’s never too early to plan for St. Patrick’s day.  So, why not send this card with a peppy limerick celebrating Former Senator Paul Sarbanes and his signature act?  I believe, actually, the Senator has mainly Greek heritage but we’re all Irish on St. Patrick’s Day.

There you have it.

Governor Kaine talks healthcare

December 11, 2009

With the US Senate debating the healthcare bill in the other Washington, I had the privilege yesterday of meeting Tim Kaine, governor of Virginia.  This was Governor Kaine’s second visit to Seattle since becoming Chairman of the Democratic National Committee.

Governor Kaine discussed a wide range of topics with a small group assembled in the living room of my neighbors, Eric and Suzi LeVine.  Foremost on everyone’s minds was healthcare and the war in Afghanistan but the governor also addressed the recent off-year elections, balancing needs of business and labor, and the party’s strategy for 2010.

Politics has a way of turning its practitioners into sound-bite spewing automotons but Governor Kaine seems completely at ease with his roles as chief executive of the Commonwealth of Virginia and leader of a large and unruly political party.  Once his service to his state and the nation concludes, one can easily imagine the term-limited governor returning to his prior life as a civil rights attorney.

Governor Kaine at the 2006 Annual Meeting of the National Governors Association. Photo credit: NGA.

The photo above isn’t the most flattering one you can find but it shows Tim more or less as a regular guy (granted, that’s a Brooks Brothers polo).  If I had photographers following me around at work (and I most certainly do not), that’s the facial expression I would have most of the time.

Though it was not discussed yesterday, the governor recently made the New York Times Magazine’s “9th Annual Year in Ideas” list for his cul-de-sac ban.  I have been a lifelong fan of square blocks but I didn’t realize one could actually ban cul-de-sacs, a dead end idea if there ever was one.

Lastly, I would be remiss if I did not conclude with one more kudo for Suzi LeVine, the evening’s host and master of ceremonies.  She’s one of those rare private citizens who doesn’t just talk about making the world a better place, she organizes and makes it happen.  It’s inspiring to have that kind of leadership in the community.

More Sarbanes-Oxley greeting cards

November 8, 2009

Our first Sarbanes-Oxley greeting card was more popular than I expected.  Apparently, there is pent up demand for cards that express a range of sentiments that arise from compliance with our nation’s financial regulations.  Hallmark, take note.  So, I am reluctantly publishing a few more.  My dream of writing a blog that provides serious commentary and keen business insight will have to be put on hold for yet another day.

This first card is appropriate for expressing sympathy to long-suffering consultants at Big Four audit firms.  As we are all aware, Sarbanes-Oxley’s independence restrictions have reduced the scope of services that may be provided to audit clients.  This can be deeply troubling to trusted business advisors who once prided themselves on their ability to roll up their sleeves and help clients tackle tough problems.  You can’t time-warp back to 1999 but this inspirational card can let the consulting manager in your life know that he or she is not alone…


The Act hasn’t just affected the public accounting profession.  It has had a significant impact on CFOs, as well.  There is a new emphasis on internal control and this card can help celebrate the joy of overcoming seemingly intractable control weaknesses…


And lastly, we all know that dealing with our complex regulatory environment requires a lot of work down in the trenches.  This card is equally appropriate for auditors working on Sarbanes-Oxley engagements and for client accounting personnel dealing with the additional workload…


Do you have an idea for a Sarbanes-Oxley greeting card?  Drop us a note.