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Clear objectives and an open environment can create a winning enterprise

by Stephen Hawley Martin
for Virginia Business
July 14, 2006

One job of the primary or top team of an organization should be to set overall goals to be accomplished during the year or the quarter. In a manufacturing business transforming to a lean enterprise, these might include goals to do with inventory turns (how quickly a company replenishes its entire stock of materials), throughput (ouput or production over a period of time), customer PPM (parts per million, a measurement of defects), on-time delivery and a host of other metrics. In the ever-more competitive global economy in which most companies now operate, a business must continue to improve and become more competitive or risk extinction.

In a traditional organization, the top executive typically hands out objectives to his various subordinates who assign them down the line. In the case of the lean enterprise, the primary or top team determines the objectives and divvies them out to various teams. The individual teams determine how they will meet these objectives.

You might ask how the primary team can be sure progress is being made? And, what can each team and the primary team do to monitor progress? I suggest a mechanism we will label the “objectives worksheet,” which is a simple and concise tracking mechanism that will allow the team to monitor and respond to key business metrics. Its purpose is to provide a clear focus for each team and to establish accountability for each team’s expected contributions. It will also serve to create a sense of urgency.

Every team should have an objectives worksheet. The primary team should design it using a standard format so that it is consistent throughout the organization in order to eliminate the possibility of confusion or misunderstanding.

The primary team ought to begin by working out a global worksheet, which will measure overall organizational performance. The global worksheet’s specific objectives will be high-level. The objectives incorporated on worksheets at other organizational levels should combine to support these overall objectives. The primary team should review the global worksheet weekly at its team meeting. The rest of the organization should be privy to the global worksheet, too, and be kept abreast of progress toward global objectives perhaps monthly during one of their home-team meetings. This will not only keep everyone in the company informed on progress, it will create peer pressure throughout the organization to make the numbers since everyone will be working toward these goals.

This openness may go against the grain of some traditional managers. We’ve all seen those who guarded information. They may even have kept it under lock and key. After all, information is power. Their line of thinking must go something like this: If I have it and you don’t, that makes me more powerful than you. If I’m more powerful, that makes me superior, doesn’t it?
If employees don’t know how the company is doing, if they don’t even know how they are doing, how can they be expected to improve?

This is one reason top-level lean leaders make sure everyone in the enterprise knows the size of the company, the sales, and key financial indicators. But it is not the only reason. You’ll recall that a sense of belonging, an esprit d’corps, is part of what enables an organization to get ahead and stay ahead of the competition. It’s pretty difficult to be proud of what you are, and how you are doing, if you don’t know what you are and how you are doing.

Readily available information, information that can be had for the asking, is not all that’s being talked about here. Leaders need to be sure people know what’s happening day by day and even hour by hour in a manufacturing plant. People should start each day with a brief meeting to review the prior day’s performance and to establish goals for the day ahead. Information about how the day is going should be posted as frequently as every hour on boards or monitors everyone can see. These postings might track throughput of work cells, quality performance, cost and delivery performance, corrective maintenance and machine performance, as well as the training status of individuals, and other team measurements.

The lean factory is a “visual” factory. Leaders in service businesses would do well to consider how some of the techniques used might be adapted to their situation. Production line scoreboards keep an assembly team apprised of hourly production. All around the factory, walls display charts and graphs — which are frequently updated — keep everyone informed about such things as output compared to goals, sales and profit year-to-date, quality levels, inventory turns, training schedules and the progress made by individuals who are in training. The list of what is tracked reflects what’s important for a particular business and group of people.

A visual factory doesn’t stop at metrics. Instructions for performing procedures are displayed where they are needed, and there are pictorials employing drawings, diagrams, and schematics, rather than written words, which may not be as easily understood.

Kanbans (cards, signs or other means of conveying information) are used to identify arriving inventory and are sent along with empty containers to signal the stock room or a supplier that the time has come to replenish an item. Kanbans accompany products sent to customers, who eventually will return them to signal a reorder. With all this information readily available, it should be possible to judge a production cell’s performance from a quick look around.

In short, in the lean enterprise information is in the open for all to see and use, rather than buried in a computer or locked in a manager’s desk. This in turn creates a sense of ownership and commitment that can lead to outstanding performance.

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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.