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Lean Health notes
Thursday, 22 May 2008 Compiled by Malcolm Macpherson or Re-thinking the patient journey in New Zealand health care Local government and health - comparisons across the Lean service spectrum The two sectors are not the same, but they share much DNA in common Designing against demand It all began in Japan Well, strictly speaking, in Detroit, where Taiichi Ohno went to observe the Ford Motor Company's car-making business. Walking around the factories, sitting on production lines, gathering an understanding about how 'the work' worked, led Ohno to his early insights. Later, back in Japan, those insights were to be the basis of the Toyoto Production System. Ohno's key insights, and the basis of the TPS, are: The best way to produce variety is to put variety 'in the line' (vs the traditional approach, which was/is to make lots of different batches, each the same) Reject a 'unit cost' approach. Cost is a factor of flow; the worse the flow, the higher the cost. Seddon says: focus on flow and costs will fall, focus on costs and costs will rise. Unit cost as a basis for management is bound to drive up overall costs Only make what the customer wants to buy, so that flow is matched to customer demand (and inventory is low, and the money is in the bank before production of individual items begins) Make people central to the action, with control, learning and improvement designed into the line Balance demand, manage flow, focus on customer pull Outsiders typically think of these methods as tools, with labels like 5S, value stream mapping, kanban, poka yoke and so on. The use of these and other tools (including the TQM-derived tool kit that six sigma uses) will improve existing processes (because existing processes are often pretty bad) but not as much as is possible, and not as sustainably. Many people have visited Toyota over the years, eager to learn the TPS secrets and employ them in their own businesses. Many have failed, or at least struggled to do so. The conclusion has often been something like 'well, OK, it works for Toyota, in Japan, but doesn't translate to my business'. Wrong! It hasn't translated because the fundamental point about the TPS is that it's not a box of tools. It's not a methodology. It is about culture, and continuous improvement, but most of all it's about understanding the system. A problem with Lean Sigma approaches is that they are tools-based. Much better than nothing, but far from the potential that a systems thinking approach can and will yield. Lessons from Vanguard's work in the Central Otago District Council New Zealand's best contemporary case study The CODC is investing $0.5m, 120 consultant-days, and about 500 (and counting) staff days, in a root and branch Lean intervention. We discovered, the hard way, that 'once over lightly' is better than nothing, but nowhere near as good as doing the job properly. Our first experiment with Lean and systems thinking was partially-informed and DIY, achieved some gains, but not all that could be, it was looking to be hard to maintain, because with the best of intentions, it was still poorly conceived and superficial. Why is lean in a service organisation not the Toyota Production System? The people we provide services to are participants, not purchasers (and certainly not products) - part of, included within, the processes we employ. Unlike a production line, where the goal is uniformity around nominal values, patients/customers in a service organisation are all different. In health care especially, the patient is not only a participant, but the centre of service delivery - patient-centred, not product-focused - and every patient is different. Why is service lean not re-engineering? Because it is about why we do things; the how (the process) is just the delivery mechanism. Re-engineering is just doing bad better, when the solution should be about stopping doing the 'bad', and starting doing the 'right'. Why do system thinkers like John Seddon (Systems Thinking in the Public Sector, 2008, ISBN 878-0-9550081-8-4) abhor what they call 'tool heads'? In brief, because to codify method is to impede thinking. Taiichi Ohno insisted that codification is wrong, and that practitioners should avoid a 'tools' approach, and so "... for many years would not allow anything to be recorded about [the Toyota Production System] because improvement is never-ending, and by writing it down the process would become crystallised." To codify is to impede. What matters is how we conceptualise. Thinking is the key, and tools inhibit effective thinking. Notes The greatest leverage for change is achieved when the organisation is understood as a system. A service system brings largely intangible expertise together in response to the variety of customer demands In service organisations the customer sets the nominal value A service organisation needs to be designed for customers to pull value - to get exactly what they want Systems view - the starting point is to understand that nature of customer demand - study the flow of demand through the system - discover system conditions that prevent variety being absorbed (sometimes known as best practice!) Customer demand Two types - value and failure 1. value = demands you want customers to place on the system 2. failure = demands caused by a failure to do something, or to do something right, for the customer Because failure demand is created by the organisation, it is under the organisation's control. Turning off the causes of failure demand is one of the most powerful economic levers available to managers, it has an immediate impact on capacity. Strategy Strategy lies in operations: designing against demand leads to new and better services, a new and better strategy. In a lean service intervention, strategy is emergent! Malcolm Macpherson Champion for (and instigator of) the Central Otago District Council's national-first trial of Lean/systems thinking in local government: a Vanguard Consulting-led $0.5m investment (in a $30m business, and with significant Central Government co-funding) in the introduction of customer-driven systems thinking (sometimes also styled as Service Lean) in the district council's two dominant lines of business (consenting and permitting; and asset management, principally roading). This intervention will radically change how the council functions, with the investment of 120 consultant-days, and over 500 staff days in a comprehensive ('down to the keystroke level') scope/check/plan/execute exercise that has also involved key suppliers, as well as on-site observers from the Central Government co-funder. CODC's experiment is being watched with considerable interest by the local government sector, by the sector's funders, and not least by its ratepayer and customer constituencies. It is a high-profile project, likely to be fundamentally influential across the sector, and not without fishbowl risk. As 'patron' and instigator (it was at his suggestion that the council's CEO first visited the consultant company in the UK, and his continuing support helps keep commitment high) Malcolm Macpherson is compiling a case study of this exercise, the 'Check' chapter of which will be available soon in draft form at www.brilliantnz.com. |