Keeping the Lean Journey on Course – Part 1

It may be just a coincidence, but I have been working recently with four companies that needed to have a top-level visual management system. Each of these companies is serious about lean transformation of their entire organization.  They have developed their value stream organizations and are working hard to establish their lean management systems (LMS).  Moreover, their leaders are working hard to create a lean culture across their organizations. They have committed themselves to leading the lean effort. They take part in kaizen events; they (almost) never miss an improvement “report out”, and they are regularly at the gemba. There is an emphasis on strategy (Hoshin Kanri), and also on visual management and effective stand-up meetings. They know about real lean, and they have gone far beyond just putting a few lean manufacturing tools in place here and there.

So far so good.

But what they were finding was that LMS had not reached to the executive suite. Managers still found themselves attending the usual monthly meetings with the President and a serried rank of VP’s, sitting down in the executive conference room with fat reports and slim outcomes.

The contrast with their day-to-day lean work could not be more stark. Their own work as managers was not changed much by the lean journey. It was a struggle month by month to keep on top of the company’s lean journey. They did not know if the strategy deployment was really working, and worse, if the financial and operation results meant anything real. Here’s an example:

One of the companies I’ve been I working with is a medium-sized multi-national manufacturer in the mid-west. They make industrial products and are in the process of restructuring the company to support their newly-focused strategy. I asked one of the plant managers how his value steam performance boards linked into the larger LMS. He replied that the executive team had recently introduced a weekly conference call to review every plant’s results and to give the plant managers their “advice”. Lacking a capable LMS at the executive level, the leaders had resorted to micro-managing the plants and (as a consequence) giving less emphasis to the strategic leadership the company sorely needed.

With other companies I’ve been with recently, the same issues have surfaced. Now, these companies are widely different. One is a regional healthcare organization. Another is a family company making plastic containers used for packaging various kinds of liquids. But what these companies have in common is they are all having success with lean and they have all seen a need to use the same kind of visual controls at the executive level.

Using terms like the “Company War Room”, “Mission Control”, or the “Enterprise Obeya”, they have created a room in their organization where the various aspects of the company’s business are planned, controlled, and reported each month using visual methods and PDCA. These companies are taking LMS to the next level.

In this blog, I’d like to lay out some specifics of what the Enterprise Obeya Room is and how it should work.

Let’s start with the purpose.

The word “Obeya” just means “a big room” (in Japanese) and the executive Obeya room lives up to this. You need a large dedicated room in a convenient part of the organization where the leadership team can work together using visual management. Visual management enables leaders to see the big picture, to monitor strategy, to identify problems, to be consistent, to take timely remedial action when things go wrong, and to work together as a team.

The Obeya room displays the company’s aspirations, their plans, the on-going outcomes of their efforts, and provides a mechanism for bring these issues to the attention of the leadership team when things go wrong. The executive team applies same PDCA that is used throughout the company for problem solving and continuous improvement. In most companies the executive team meets formally once per month in the Enterprise Obeya Room. This monthly meeting is the hub of their leadership, management, and business control.

But the Obeya room is also used frequently throughout the month. Whenever there is a need for company leaders to discuss issues, cultivate ideas, or solve problems, leaders use the rich and visible information in the Obeya room, along with other tools and equipment required for brainstorming, mapping, and issue identification and problem solving.

What does the Obeya room look like how does it work?

Schematic of an Obeya Room“Walls” are laid out in Plan, Do, Check, Act sequence. The first wall – Plan – is populated with the leadership team’s strategic plans for the company. They also show the plans for lean improvement for each value stream. And to complete the picture, the Plan wall shows the current operational and financial forecasts. The strategic plans derive from the annual Hoshin Kanri. The Lean journey information comes from the value stream’s mapping and plans for break through improvement. And the operational and financial plans come from the SOFP (sales, operations, and financial forecasting) planning process. These operational and financial forecasts general go out 18 months.

The Do wall shows the major activities that are making the plan come true. The Hoshin Kanri is shown for the next level down from the Plan wall. This usually means the Do wall shows the level 3’s of the HK process. The Lean Journey section shows the A3’s or other lean project planning tools so that the leadership team can not only keep track of the projects, but also be a part of the review and sponsorship of the planned improvements. There are also box scores showing the expected outcomes for the kaizen and other improvement events currently in the value stream. The operational and financial information is shown using the current forecasts laid out for each value streams, often in box score format.

The Check wall is the largest section. It shows the current results of the company’s efforts. The status of each Strategy Deployment project is shown. The status and outcomes of each current lean improvement kaizen or other projects. There can also be a tally of how many “just do it” improvements have occurred year-to-date. The operational and financial outcomes show the most recent box score results for each value stream, and also the trends for the last 6 to 12 months.

The Act wall shows the countermeasures and other initiatives the leadership team has assigned themselves as a result of these Obeya room reviews. The Act wall shows the issues and problems identified during the current Obeya room meeting. These are prioritized and assigned to one of the people on the team. These assignments remain on the Act wall until they are completed.

There are often other additional walls that are used to highlight specific activities within the company, to drill down more deeply into some aspect of the company’s operations, or to provide additional external information that may be useful to the leadership team.

In my next blog, I’ll discuss more on Obeya rooms:  why they are essential; what goes on in the Obeya room, and where do lean companies go from here?