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Tweaking the Corporate Culture: A Situation Intervention for Lean Kaizen

by Steven R. Hanna

261 pages; quality trade paperback (softcover); catalogue #03-0405; ISBN 1-4120-0042-4; US$24.00, C$28.00, EUR20.00, £14.00

This book explains how to conduct a planned intervention in a company. Managers will be able to improve almost anything with less stress on people and cost to the organization.

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About the book      About the author      Sample excerpts      Catalogue info

About the Book This book includes techniques to tweak the corporate culture and continually improve operations as well as organizational climate. What's in it for everyone? Those who use the practices in this book will become more empowered to change their working life and their personal life for the better. What is a 'situation intervention'? Can this get you increased profit, less headaches and reduced stress? Interventions can be kaizen events, lean thinking, or any other strategy that can be modified to fit your organization. Planned interventions, when matched to your organization's culture, can get more improvements in number and magnitude as other strategies. Using continual assessment makes the intervention a 'personal thing'. Workers support and buy-in faster with Hanna methods. You can use the techniques in this book to choose the best practices and implement them in your organization without betting the whole company or experiencing significant fallout.

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About the Author Steven R. Hanna is a professional speaker, professor and change agent with over 20 years of consulting experience. He has worked with a broad spectrum of companies in a wide variety of industries including manufacturing, worked his way through college and run his own companies. He has helped to transact and transform hundreds of client companies in the United States, Canada, and several other foreign countries. He has trained thousands of workers (occasionally an entire organization) and as ombudsman has maintained over a 92% retention rate. He has a Ph.D. in engineering.

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Sample Excerpts

NOTES FROM THE AUTHOR

Serve others and have fun. Continually learn from life. Set your goals high, demand a lot, and expect nothing. Be humble, appreciate everyone, and we'll all get there together.
- J.B. Hanna

Mr. Gerstner said it. Culture is everything! Changing organizational culture is difficult. Tweaking it is much easier. Tweaking the company culture can increase quality, flow and profits dramatically while simultaneously lowering the stress and reducing the headaches of the people in the organization.

This book explains how to conduct a planned intervention in a company. Companies, managers and people who learn from this book will be able to improve almost anything. Companies with simple structures not abused with interventions and modern buzzwords can conduct a short assessment and implement the techniques in this book. The more complex companies will need to make a more thorough assessment and concentrate on the people processes more. This book includes techniques to continually improve operations as well as organizational climate. Top management can use the book to tweak or change the corporate culture. What's in it for everyone? Those who use the practices in this book will become more empowered to change their working life and their personal life for the better.

What is a 'situation intervention'? Can this get you increased profit, less headaches and reduced stress? Interventions can be Kaizen events, lean thinking, or any other strategy that can be modified to fit your organization. Planned interventions, when matched to your organization's culture, can get more improvements in number and magnitude as other strategies. Using continual assessment makes the intervention a 'personal thing'. Workers support and buy-in faster with Hanna methods.

This book has multiple ideas interwoven. It tells a story about a fictional company that is headed for trouble. The purpose of the story is to introduce various ideologies (introduce some Hanna stuff), strategies and tactics used in the book. And, there are useless stories designed to entertain those who have "been there and done that"!

Major points are written in bold type. Some points are divided into multiple parts and spread throughout the book. This is done to get the reader to think and learn. When the pieces are found and put together, a light bulb should turn on in their head, and the reader can be proud of their own good work.

The book provides instructions so a simple improvement based intervention can be done with little risk in most any company. It is also written so a higher behavior based level intervention can be done with proper assessment if the organization has developed to that level. When the reader is through with the book, they can conduct their own experiment and intervention. Readers will be able to improve their own attitudes and performance.

Many books have followed the format of this book before, so this is not new. It is important to understand that most of these ideas are not new, although new buzzwords have been added over time to renew its interest. Material included in this book comes from a wide variety of training and the experience of many successful experts who practice their theories. Ideas in the book are derived from W.E. Deming, Michael Regan, Taiichi Ohno, Ali Goldratt, Masaaki Imai, Michael Thomsett, Felix Janszen, Richard Shonberger, Nikkan Shimbun, Armand Fiegenbaum, Phillip Crosby, and a slew of others of whom many have never heard. The materials in this book have been applied by 100's of companies around the world in various forms. What is new is continual assessment - selecting the best practices of interventions, matching the planned intervention to the company's culture, and doing all this "on the fly". That is precisely why this story is worth telling.

Assessment is an intervention. When a change agent visits a company, they have intervened. Many consultants do not assess an organization; they tell everyone "you must do what I say to survive." Often the problem with experts is they try to give everybody the same treatment or training. With Hanna, perception is an individual thing; motivation is an individual thing; reward is an individual thing; and intervention should be an individual thing. Hanna tries to give each person at least one thing they need. This gives a different experience to each team member.

When team members share those unique experiences, it gives the team a whole learning experience and hence a better chance of gaining synergy. Sharing experiences is one way of changing culture and/or maintaining it. Hanna is a very individual method of team building. Each team member walks away knowing they got special one-on-one help and the team builds as the experience is shared.

Interventions happen everyday. Some are planned. Some are unplanned. Most unplanned interventions cost something: money, loss of profit, stress, fallout and/ or turnover. Many planned interventions cost also, especially when the intervention is not matched with the corporate culture and financial situation. Reading this book is an intervention. After you read this book, your life will change. So, get ready, read the book at your leisure, and think about how you will integrate this material into your own situation. Remember: You do Hanna one thing at a time, one individual at a time.
Steven R. Hanna, Ph.D.
Manhattan, Kansas
27 October, 2002

CHAPTER 2

THE INTRODUCTION

James returns from his short excursion and interrupts the conversation.

"Define culture?" he asks.

"R.W. Griffin says, 'Organizational culture includes the set of values, beliefs, behaviors, customs, and attitudes that help an organization's members understand what it stands for, how it does things, and what it considers important," I reply.

"Organizational culture is what all stakeholders see; it's an external thing. Climate is an internal thing." I start to explain climate, but James is not interested. He interrupts with the next question.

"What do you mean intervention?" He wants to know.

"An intervention is anything that happens to or occurs in an organization." I say.

"An intervention occurs anytime someone walks into a group situation; whether or not they intend to do anything, they have intervened. Sometimes the intervenor (sic, new word) does not know they have intervened. Environment changes in a firm, market changes, and consumer shifts could also be interventions in a system. Interventions happen everyday. Some are planned. Some are unplanned. Most unplanned interventions cost something: money, profit, stress. Many planned interventions cost as well, especially when the intervention is not matched with corporate culture and financial situation of the organization." I explain.

"You keep saying that word 'planned' like it means more than just having a list of steps or a cookbook?" he asks.

"Yes, in addition to having time phased processed steps, 'planned' means that the operations, process, and content are evaluated. Best practices are determined and modified to match the company's development, ability to change and need for change, while simultaneously minimizing the stress and cost to the whole system, people included."

"For example, when a company is bought or sold, there is a merger or acquisition. When a top manager is replaced or a consultant is hired, the intervention can be very stressful on the organization affected and its members." I explain.

"What about assessment? Talk more about that?" he inquires.

"That is more difficult. I assess the organization's culture, including ideals and vision, systems, development (of people, organization and technology), equipment, facilities, the financials, the structure, and the climate." I say.

"It sounds like you assess everything, " he injects.

"Then, I match the planned intervention to the company's culture, its ability to change, its people's development and its business development. I can do this dynamically, in process, or if needed, following a completely preplanned intervention with very careful structure. I induce sufficient structure to overcome resistance to change, no more. We can do it 'on the fly' in organic companies and we must plan very thoroughly for mechanistic firms." I claim.

"What's organic mean?" he asks.

"An organic company is identified as one that has a flat hierarchy, small top management, little structure, broad job descriptions * sometimes overlapping or vague jobs, lots of job control at all levels and caring and involved workers." I explain.

This kid is getting very interested in the conversation. My friends are becoming bored; they've heard it all before. Just once they'd like to have someone listen to their solutions instead of mine. More often than not, these friends of mine give me ideas that I've used with clients. I don't tell them.

He catches himself; he has realized he is getting really interested. His previous exposure to consultants makes him careful of the situation. Now he goes into a defense mode.

Match Intervention to Culture

Induce minimum structure
Overcome resistance to change
Handle customers fast
Maintain reserve capacity in people.
Make the bottleneck people, but never
let the bottleneck be -
knowledge workers!

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I envision the company structure in my head. Already I'm thinking they have weak management. The organizational structure looks like:

It is a standard functional structure. I asked the young man many more questions; to some he said yes and to some no and to some he wasn't sure. I did not tell this young man that I was assessing him or his company at this time. Of course, I did not know whether I was hearing fact or fiction.

Finally, he says, "Look I think you've asked enough questions. My head is spinning. Maybe you can't help. Maybe no one can."

I replied to him that, "any company can find 15% improvement in just about anything just by trying anything."

This young fellow was not sure he would buy into that idea. He asked some pointed questions and I answered. I told him, "Ray Croc of McDonald's used to say, 'The three most important things are price, quality, and service.' Attack these three things in the order I gave you and you can clean up the business in less than two years." As I am speaking to James, I keep in mind that other companies may need to change the order.

"It's really important that your company adopt these three key initiatives at the corporate level and, until you get a 30% positive change in all three, do not change the initiatives, merely their priorities!" I said.

The young man seemed to become more perplexed rather than less.

He changed the subject; I was happy to talk about the beauty of the park. I explained its history and he seem to look somewhat better.

"This place was once an Indian campground. Later it became a place for Chatauquas. Many famous people of old have been here and spoken. Now it's a park." Perhaps I challenged him too much, I wondered. He said that I had asked some very good questions and that he was going to discuss them with his cohorts. We parted company giving the amenities that should be.

What happened here was that we developed a relationship, some trust and a degree of respect for each other. I got to see the company from this kid's point of view.

Casually, I accepted his offer to come visit him at his plant so he could show me more. He said he'd like that and he would have to get approval.

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CHAPTER 4

THE CALL

Less than a week later, on a Monday, I did receive a call. On the phone, this kid was asking me more questions. I thought he was never going to stop talking. He was excited and anxious. Normally, I would stop someone who talked this way in midstream; however I liked this young fella', so I remained quiet as long as I could stand it. Finally, I interrupted him and asked him if he knew the 3M's. He did not. I explained them.

"The "3 M's" are money, making and matters. I have used these three terms for many years. In consulting I have learned that to quickly assess clients you must have a very clear understanding of what you are after.

Money represents all of the resources that flow through a company: cash, people, assets inventory and the like. If a company has no cash flow, they either improve that or go under. If they can't control the cash flow in their business, they might as well close the doors.

Back in the 1980's several retail microcomputer chains were in this fix: Cash flow was poor. Companies were buying PC's on net 30 at best. Wholesalers were not floor planning inventory for their retailers. Many large corporations paid in 120 days. Cash flow and return on assets was very low. There was no way to cash flow the business. Inventory turns were 1.7 per year.

Margins were tight and certain costs were out of line. Freight cost ran 3.5%. Even returns were running 4%; when one item in a lot was bad, often the whole lot was bad. (Dave's Computers was like this for example.)

They had under-capitalized their businesses. They were paying fifteen percent interest on eighty per cent loans (20% down payment) at best. They had gross margins of less than 18%. Any one who stayed in the computer business was crazy as Dave at that time.

If PC retailers did learn anything, it was to strive for zero inventory. Instead of buying large quantities, computer manufacturer CTS committed to large purchases but only accepted small shipments at a time.

Realistically, Œ0' also meant have one to show, one to go and one in the hole. One in the hole meant one on order in transit in the supply channel. One retailer Abacus Computers turned their inventory 23 times per year using this technique. These companies were exceptions in the computer industry.

Cash flow is first; capitalization is the second most important variable. If you intervene in a company, there is a good chance profit will go down, especially if you follow many of the popular buzzword based strategies and tactics. Consultants cost a lot; training is expensive and meetings are often wasteful of time. Good change agents try not to strain the organization's culture and resources so much.

Many companies try to have a higher return on assets. It looks good for the stock. Some companies even have policies to not own real estate, buildings or equipment. This makes their financials look better. It is sad that many companies have forgotten the long term value added from owning appreciable assets. Depreciation can be used to reduce taxes and perhaps to generate cash for equipment replacement. Facilities and equipment should not be bought to keep depreciation up alone.

Every asset a company owns should be thought of as a product for sale. If it is returning cash equal to the cost of ownership and operation, it is a useful asset. People are not the best asset of a company. People are more important than assets. People are value!

Making is everything that is done to get the product out the door and into the customer's hands. Product is what we sell. Sometimes it is tangible and sometimes it is intangible. Usually, product is a combination of both. Companies that offer mostly services understand this fact; customers buy perception and feelings as much as they buy things. Often manufacturing entities do not understand customers. They disengage themselves from the customer getting as far away from customers as they can. The recycling of the used up product is also included in making.

Making includes everything in the value chain. It is the total lead-time from dirt to dirt, not some convenient time from raw material to finished goods (or RM to end user). Returns and recycling should be included also. The point is you want to keep in mind the total time.

Making has four major pieces that have been defined and redefined over time. Value is the only part of any process that converts something less useful into something more useful that the customer is willing to pay for. Utility is those things that are convenient and/or of value to the customer and the customer is willing to pay for it. Next comes unavoidable waste, which is waste that no one in the company has either the experience or technology to eliminate at this time. The last category is waste that no one is willing to eliminate or is aware of its existence.

Matters are everything that has to do with stakeholders. Stakeholders are everywhere and anyone. It is extremely important that organizations treat everyone well. Matters are marketing products, the treatment of stakeholders, the treatment of customers and also the treatment of employees. The human mind is a renewable resource, best used and not abused. How a company shapes its environment and climate, these things matter. Much more can be achieved by members when the organization is designed to facilitate the growth of its people.

When a company is assessed on how well they do these three M's, it is much easier to match the proper intervention to meet their needs. Then, put the phrase in the order of need. For example, if a company needs cash flow we would say, "Money makes matters!" which means that if we increase cash flow (money) there will be less stress on the people (matters). And, if the firm is not effective or is inefficient in production we might say, "Making money matters." Or one more might be for a company who needs to treat employees better or improve customer relations, "Matters make money!""

Then I asked him about the 3 D's of business. This, he did not know either. The 3 D's are concerned with discipline.

The discipline here is not the same as most human resource people define as discipline. That type of discipline is really punishment or some equivalent. 3-D discipline is talking about procedures, good standard procedures that people are willing to follow. If those procedures are not possible, then discipline refers to the controls that are necessary to run the business according to the organization's culture. Design discipline into the systems and processes. That is the best way to become and stay disciplined. It is extremely important that discipline be compatible with culture. Match discipline to culture. In fact set the corporate culture first; follow with sufficient discipline to reach the corporate initiatives. The three disciplines are fiscal, productive and distributive.

Fiscal discipline is concerned with the management of all the resources of the organization. If a company is not fiscally disciplined they will need to focus on this aspect first. Sometimes when a company has very deep pockets and their lack of fiscal discipline has not yet eroded their cash, they can start in the other two areas, but most companies don't have this choice. No company ever should spend more on intervention than cash reserves can support. If a company doesn't know or is not sure where to begin an intervention, begin with money (or fiscal discipline). Too many companies use cost cutting measures to achieve a sort of pseudo-discipline. Getting fiscally disciplined doesn't mean squeezing money out of everyone nor does it mean to micro-cost manage. These tactics should rarely be used in only emergency and very temporary business conditions and situations.

Often companies put in place controls such as spending or approval limits for various managerial levels within the organization. A better method is to create a capital expenditure justification procedure that everyone follows. Of course companies need budgets and the like; but everyone in the organization should be expected to adopt a "spend nothing policy." This means no one is willing to spend one more penny than necessary. It means that if a person, supervisor or executive has leftover monies in their budget, they do not spend the excess; they turn it back in for other use.

Continually eliminating waste and doing so economically should also accomplish fiscal discipline. Unfortunately, modern interventions cause too much time spent on trying to eliminate one-time variations (micro-management does this). Statistical Quality Control (SQC) procedures at least focus effort away from unknown residuals, one time non-recurring problems and random problems of unknown cause. SQC focuses on assignable causes. SQC also focuses on what is called the 80/20 rule or Pareto's Law. Pareto, who was a priest, had figured out that most of his parish was poor and unable to give and a few were wealthy and could give much more, so he focused on the rich.

The 80/20 rule means that 80% of the problem can be eliminated by solving the right 20% of the causes. This is an excellent method of working on problems that are worthwhile rather than working on any and all problems. Another point herein is to be willing to spend time on what "your people" want to spend time on. Sometimes eliminating a headache is as important as looking for "cold hard cash" savings. Companies must maintain a balance of being effective and efficient and being sensitive to the needs of employees.

Too many companies spend too much money on accounting and its practices. Accountants make keeping track of costs too complicated. Then, the accountants have also fed their own and perpetuated complicated, unnecessary practices. Government and regulatory agencies such as the Securities Exchange Commission have adopted these complex procedures and bookkeeping rules. It is really sad. Companies should ban together and do something to change the future of finance. In the meantime, design into the computer systems as much control and accounting as possible and get rid of as many accountants from your company as possible. Put the accounting in the hands of the workers; trust them, educate them, and audit the systems using randomly chosen workers.

Auditing is another area of great concern recently. Large accounting firms have developed over the years by building their techniques into law and building their reputations as reliable. In recent times, these same companies are guilty of crimes along with company executives of embezzlement, false reporting and very creative bookkeeping techniques. There have been laws on the books for years to punish such people. The laws are usually not exercised. If we are going to change the law, make two simple laws. First when someone is guilty of such "capital" crimes, make it a capital crime punishable by death. In the summer of 2002, I read an article in the China Times that a manager (CEO) of a Chinese hospital embezzled $250,000. She got the death penalty for the crime. Second is that everyone involved gives up everything they own, and anything shared by their families is forfeited also.

Give up control to the workers to get control. Make everyone an auditor to minimize the chance of something going wrong.

Productive discipline is concerned with being effective and efficient in everything the organization does. It is much easier for companies to recognize how to be productively disciplined. Even if a company is not fiscally disciplined, productivity can be the focus if the improvements are directed towards quick, large real gains or Œlow hanging fruit' you might say. If there are sufficient cash reserves, the focus can be on quality. It takes longer to see cash flows improve when the focus is on quality. However, in really well planned interventions there are quality Œfat hogs' too. The standard procedure of companies is to focus on direct labor when looking for improvement. What is much better is to focus on systems and processes throughout the organization. In today's companies, much waste is in accounting, which has been explained, marketing and engineering which is addressed in the discussion of distributive discipline. The key to productive discipline is to flow value and nothing else.

Andrew Carnegie is claimed to have said it this way:

Make it right
Make it fast
Sell it quick
Make some more!

Carnegie's idea sounds pretty good, even now.

Distributive discipline refers to how we work with customers, suppliers, employees, and stakeholders. It is much better to improve internal customer service before going to the external customer. You should not run out and ask customers what they want. You must be ready to respond to their needs before you ask or you putmorestrainonthe systems. In otherwords,if you ask the customer, his answer becomes his expectation. Failure to deliver the expectation will become frustration. Internally that will cause job satisfaction to go down and externally it will cause customers to become dissatisfied. Good people and customers will leave such an organization.

Advertising comes under matters and distributive discipline. Most companies spend a great deal on advertising and have no concrete idea of how it helps them. It is amazing how poor many TV commercials are, and the advertising companies get away with it! Companies should first design and build (provide) what the customer wants and needs. Yes, it's OK to discover hidden needs. The customer ultimately determines the quality. The provider determines the expectations. Unfortunately, the latter is changing and customers are transferring expectations from one provider to another. So, the very best providers will be the pacesetters of expectations.

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Catalogue Information

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