It’s Everyone’s Job to Demonstrate What Excellence Looks Like

In 2009, Paul O’Neill gave a speech to the Tennessee Hospital Association, titled, “The Irreducible Components of Leadership Needed to Produce Continuous Learning and Improvement.” Among other topics, Paul talked about the worldwide effort undertaken within Alcoa (while he was CEO) to evaluate the quarterly and year-end closing of the books, root out wasteful parts of the process, and trim the time to close the books from 11 days to the perfect goal of 3 days.

We excerpt this part of Paul’s talk here because it’s an inspiring and informative example of how a goal of perfect performance energizes the workforce — and the workers who own the related processes — and how such a “3-day close” achievement allows for resource maximization and higher levels of value creation.

What would your organization’s “3-day close” equivalent be? What benefits would you expect to accrue by setting such a goal and executing a plan to achieve your goal, and how would you expect people in your organization to engage?

Quality is the Job of Everyone in an Organization

If you are really going to be on a quality quest, it has to be about everyone in the institution.  It cannot just be about the people in the quality department.  The people in the quality department cannot produce quality for the organization.  This does not mean that they don’t have a big responsibility, but they can’t do it. In the same way, infection control committees cannot fix infections.  They have an important role to play but they cannot make it happen for the whole institution.

So in a quest to make sure that everyone in the institution grasped these ideas, in about 1991 I called in  the comptroller at Alcoa.  I asked him, “Ernie, right now, in this world-wide enterprise, we are closing our books in about 11 days at the end of each quarter and reporting our results to Wall Street.  I would  like to know, if we had a perfect process, with no repair work, no transpositions of numbers, no foul-ups from computer programs that don’t integrate very well with each other from computer programs which don’t interface very well with each other across 350 locations — if instead of repair work all of our time was high value touch time and we were producing value in every minute of every day — how long would it take?”

About three weeks later, he came back and said, “I have figured out the answer to your question.  Right now we are closing the books in 11 days.  If we did it perfectly we could do it in three days.”  I said “You know what Ernie, that’s our new goal.” And he said “That’s not what I meant.  We can’t really do that. That’s just the answer to your question.”  So I said, “Hey Ernie, we are trying to be perfect in everything else we do, including workplace safety and manufacturing.  So the finance function needs to demonstrate to the rest of the organization what excellence really looks like.”  It took us a year to get there.

Leaders Create the Opportunities and Conditions for the Workforce to Pursue Perfect

The leadership function is really important. I had to say to them that I don’t care how much it costs to make this perfect. I don’t care because I am so confident the value is there. And so here is your permission: you can examine all of the things we are sucking up from around the world and decide whether the stuff that has evolved over time is really critical to the financial characterization of our organization and meeting our obligations to the Securities and Exchange Commission. So, you have the freedom to redefine what it is we do.  You have the resources to rewrite the computer programs so that they are friendly to human beings instead of only people who are nerds and delight in complexity. You can make it so that it works for the people who have to do the process of financial roll-up.  And, if you need some outside help, go and get it.  So the leader needs to provide the running room for the people to work toward the theoretical limit.

And so in a year we got to the point where we could close our books in three days, full stop.  And today, if you look at the financial earnings announcements, Alcoa remains today and probably always will be the first major corporation to roll up its earnings and report them, good and bad.  Because the process works.  At Alcoa at that time we had more than 1,300 people in the finance function.  And by going from 11 days to three days, we freed up eight days a quarter from more than 1,300 of the most highly trained analytic people in the organization.  Not so that we could fire them!  But so that they could use their brainpower to help us better understand how to improve everything else we were doing.

This is not about firing people.  It’s about creating the opportunity for applying resources in a way that creates ever greater value.

This Approach Was Effective at the U.S. Treasury

So when I went to the Treasury Department I asked them how long it took us to close the books after the end of the fiscal year, September 30th?   They said they usually got it done in March.  I said “why bother?  Who cares about numbers that come out five months after the fact? I know an organization that is more complicated than the Treasury where they close the books in three days and that should be our goal for the Treasury. We should be at least as good at Alcoa.”  And so they hit me with the list of excuses.  We don’t have the money.  We are already too busy.  And then they hit me with a new one: government laws and regulations won’t permit it, smart guy.  So I said, “I will tell you what, if you can show me a rule or regulation or law that prohibits us from doing this I will go and get it changed.”  You know, again, it was taking away the excuses and saying give it to me. If you tell me there are barriers that need to be rolled away I will roll over the barriers.  There weren’t any.  It was just an excuse.  No one had examined “How [can] we do this. We will do it.” And so in 13 months at the Treasury, we learned how to close the books in three days.  If you want to see this story it’s on the Treasury website, they are so proud of it.  And it’s because we got the Alcoa comptroller to come pro bono, we didn’t pay him a cent, and help coach the people at Treasury to do it.

Now why do I tell you these stories?  I know there are a lot of health and medical care organzations that do not close their books in three days.  But they could, if the leadership decided that this is of value and a way to demonstrate to our organization that every part of our institution is on the same wavelength and we are all about excellence and we won’t live in siloes and we won’t embrace excuses and we will be excellent in everything we do.

***

I hope I have challenged you a little bit.  Maybe inspired you a little bit, about the potential for what you as leaders in health and medical care can do.

Don’t let your knowledge threshold hold you back

“Knowledge Threshold” – The point at which one has no facts or data; the limit of what we currently know.

By Bill Boyd, Value Capture Client Advisor

June 17, 2020

Recently, I helped my wife build her first vlog (video blog) post. This may not seem like a large accomplishment, but this video is one that she has wanted to make for years. Years! It was created now, because I finally realized she was at her “knowledge threshold” and simply didn’t know what she needed to do to get started. I confess I thought, how hard can a vlog be, right? Just shoot some video, upload the files, adjust them as needed, open your video editing software, arrange the video clips, audio clips, titling, etc., all to her specification. Well, maybe not so simple, on second thought. To her, each step was a problem that she didn’t know how to solve. After recently hearing again about her desire to finish this project, I began to ask questions to help me understand the obstacles that prevented her from even starting this project. Over the course of a few hours, we tackled the obstacles one by one, ultimately creating the video. Once we started the process, she quickly became very adept and rapidly gained new abilities. However, until we could recognize she was at her knowledge threshold and didn’t know what to do, she was paralyzed and unable to take action.    

The Principle of Embracing Scientific Thinking

I share this simple story because I see this pattern play out regularly in my work with healthcare leaders. The expectation is that leaders throughout organizations are leaders because of their expertise, their knowledge. But what happens when a leader faces a challenge they have never experienced before, when a leader is at the limit of their knowledge? Are they replaced with someone who seems to have more experience and knowledge? No, of course not. 

Thankfully, there is a principle — Embrace Scientific Thinking (from the Shingo Institute’s research on enterprise excellence) — that helps us resolve this paradigm. Scientific thinking helps us approach problems with rigor, as scientists seeking facts and data, not as experts who are supposed to “know” the answer. It helps us recognize and be comfortable acknowledging we are at our knowledge threshold, because it gives us a pattern, or kata,  to follow to confront this threshold.

This may sound great theoretically, but let us consider something practical. In work, typically, people tackle problems with a full-on assault. Think about how often you sit in meetings, listening for an over-abundant amount of time, multiple people debating the “right” next step or solution. Each person conveys their thoughts, while trying to convince others to believe in their view and take their direction. As Mike Rother’s work helps us see (between 16:55-18:38 in this clip), no one in the room actually knows who or what is correct, so debate is futile. It wastes time and energy, it delays progress.

If, however, we recognized we were at our knowledge threshold and instead were thinking scientifically, we would consider what we want to try next, to learn our way to the right answer. We should debate the next experiment, not the solution.

Similarly, it is not uncommon to hear people working on process improvement describe themselves as being good at “plan” and “do” (from the Plan-Do-Check-Act or PDCA cycle), but not as good at the “check” and “act” elements. I see this as a common path where well-meaning individuals have been very intent about creating perfect A3’s (problem-solving guides) to determine the “right” solution. In working the A3, the goal of the target condition (after determining root cause of the problem) is to create a new condition that solves the problems of the current condition. With the new condition defined, they feel  they just need to implement and the work is done. Except, the new condition may not actually solve the problem. 

The opportunity here is to consider the “action plan” as an experiment or test of the plan, rather than the implementation of a solution. Yes, there should be confidence in the newly planned target condition, but no one truly knows – yet – if the planned changes will produce the target condition and solve the problem. Thinking of our approach as an “experiment” allows for learning and possible failure, and more importantly, this allows for adapting to what is learned in the experiment.

In meeting rooms where “solutions” are debated, or in the action plan where “solutions” are implemented, the people working on the problem are at their knowledge threshold. This is a place where they simply don’t know the solution. They may think they know the solution; they may even be directionally accurate with their thinking based on experience, but in reality they don’t truly know. This is where a leader has a choice. The choice is to rely on habits built from “being the expert,” which unfortunately, leads themselves and others to wasted time, or to admit “I don’t know” and to design an experiment to learn. 

Building the Habit of Scientific Thinking

We are all driven by our habits. After all, habits are what lead us to rely on “being the expert” behaviors. Coming back to the scientific method, what if we combine a habit with a principle? If we were to combine using the scientific method to solve a problem by following a simple pattern? A pattern that could help us all to recognize our own knowledge threshold, avoid wasting time in debate or going through all the effort to implement change that doesn’t actually solve a problem, but rather – a pattern of designing small experiments to test theories and then implement the solutions that do solve the problems. 

This approach is rooted in Toyota kata and the study of what Toyota does each day in their patterns of problem solving. In my experience, this habitual practice using the scientific method is one potential way to learn to recognize and then work through our knowledge threshold. Of course, you would need to try this, and learn for yourself if it solves your problems. One word of advice however, once you recognize your knowledge threshold, be prepared to forever see the world differently. 

If you’d like to learn more, please visit the Toyota kata website, or contact us at Value Capture, where we help leaders and their organizations systematically, scientifically pursue habitual excellence focused on safety as a precondition.

What Can Leaders Learn? What Can Leaders Do?

Health Care Wasn’t Safe For Patients or Caregivers Before COVID-19

By:  Ken Segel, Value Capture Managing Director

April 29, 2020

For years before COVID-19, our industry accounted for the largest number of injuries and illnesses related to work of any in the United States.  The scale of COVID harm to our teams as well as our patients has been greater because of our pre-existing weaknesses when it comes to safety and improvement.

Now, in this extraordinary moment, the forces and inspiration for change have been unleashed.  Clinicians and other healthcare workers on the front lines have demanded their safety and responded urgently and cooperatively to figure out what works for patients, and how to keep themselves safe.  They have blown past awkward and unclear top-down edicts and institutional boundaries to share and seek learnings.  They have shown that what really matters is what happens at the point of care, between human beings.  Leaders with humility and strength can seize this moment to help shape much better futures for their institutions in a post-COVID world.

As the immediate threat of the first wave recedes in a community, leaders can help their organizations leap ahead if cultural healing is fed by a new determination and discipline toward the habits of excellence, anchored by safety. The tag I’ve been using on social media posts during this time – “Leadership for COVID-19, Leadership Past COVID-19” – tries to capture this sense.  Of course, there are not bright demarcations to a post-COVID period.  Change starts now.

Here are just a few learnings I see to start the conversation.  I offer them humbly as leaders and frontline workers alike face life-and-death risk and decisions every day during the present crisis.

Safety Matters the Most. Start There.

When people don’t feel safe, they can’t do their best work.  Not even close.  Literally every American now understands this truth in their bones.  Conversely, when people in healthcare workplaces feel safe, they will give all they can.  Workers who know that their leaders are demonstrably committed to their safety and their patients’ safety, as a precondition of any other work, and not a tradeoff with other goals, are empowered to perform at their highest level.

For these reasons, safety has always been an ideal focus for leaders in a complex high-risk industry to dig in deep and focus on at the deepest levels with every individual who works for them.  It can be the anchor of high performance.  But only if leaders model the way in making safety an unarguable goal, and demonstrate it every day.  The number of healthcare leaders who led that way when it comes to workplace safety pre-COVID, sadly, could be counted on one hand.

Coming out of COVID-19, what deeply reflective conversations can leaders and their entire workforces go through to generate an actionable mutual commitment to ensure that we will all work together every day to drive harm to zero?  What vulnerability can leaders show, admitting that we weren’t ready to protect our teams, and that we will learn how to do better alongside them, every day?  This conversation must happen, action must be taken, even when we feel less globally threatened, because otherwise, harm will still occur every day.  A pact anchored in the deepest human aspiration to be safe, and to create safety for others – is the bedrock for powerful relationships and powerful performance.

Transparency and Rapid Learning Cycles.  Make Them Real.   

Since the seminal 1999 Institute of Medicine Report, To Err is Human, there has been an explosion of rhetoric about the need to report and share transparently information about injuries to patients and workers, their causes and solutions, so others don’t have to fall prey to the same injuries for the same causes.  There has been an explosion of duplicative data collection and data collection organizations with the word “safety” in their names.  But there has been precious little effective learning, little information getting to or used by front line caregivers, even from within their own organizations.  We haven’t led from purpose on safety, and we let bureaucracy, in our own organizations and outside, take over.  The loop isn’t being closed, so there is little learning, and still less improvement.

Now, in this COVID moment, front line caregivers, desperate to discover things that might help their patients and especially to keep themselves safe, are sharing and seeking lessons learned “in real time” from others doing the same work, across their own organizations, across artificial institutional borders, even across national borders.  My doctor colleagues have learned a lot from physicians in their fields from across the globe.  They are pushing the stories forward into rapid experiments that will build in rigor as time goes on.  The New York Times recently captured learning that emerged in near real time, about repositioning COVID patients and delaying ventilation.  To drive these learning cycles from people actually doing the work, they have in many cases blown right past top-down directives from institutional leaders that were not based on data, or learning-based.

In doing so, they are echoing other moments where the principles of high-performing organizations have burst forward in memorable lessons accessible to the general public.  When the American top-down and wrongly chosen battle strategy to fight the Iraqi insurgency in the early 2000’s wasn’t working, the field lieutenants took matters into their own hands.  They created a real-time learning network, where every patrol was structured as a learning opportunity, and reports were filed immediately and transparently for all the troops on the ground to learn.  Soon enough, the lieutenant network’s lessons and the strategies that emerged became the strategy for the conflict, with rapid learning a core component.

Transparency and real-time learning about harm that is contributed to and learned from by everyone, every day, is an anchor system not only for making safety as a precondition possible, but feeding the culture of commitment and excellence that drives belief and high performance.

How can healthcare leaders reflect on COVID with their teams and decide to fundamentally strengthen how they share and learn from safety incidents, everyone, every day?

Will We Reinforce The Hero Complex, or Commit to Habitual Excellence?  

One characteristic that has always gotten in the way of creating true excellence in safety in healthcare is the concept of heroism.  Americans are happy to hold front line caregivers up as heroes, because they often are, as we are seeing every day during the COVID-19 crisis.  The trouble inside our institutions is that the hero mindset in individuals can lead to willing self-sacrifice that can excuse conditions that unnecessarily place the caregiver in harm’s way, like lack of PPE, or lack of a way to get help when a healthcare worker confronts an unsafe condition.  (Sadly and incredibly, many healthcare workers even face gag orders preventing them from discussing their COVID-related safety concerns with patients or the public).  It can also lead to a love of “workaround” instead of problem solving, and a “cowboy” mentality where critical habits for excellence, like working in disciplined experimentation in teams, are ignored.  The bottom line is the hero complex can let leaders off the hook for excellence, and, in normal times, healthcare workers, too.

What conversation can leaders have with their teams coming out of COVID that celebrates their true heroism, but then turns the power of that heroism to even deeper habits of excellence, driven by the caregivers themselves, not top-down edicts?  The extraordinary teamwork we are seeing every day on the news gives plenty of platform.  They know they can be excellent under even the worst circumstances.  Seize it for better circumstances as well.  

A Final Thought

Toyota’s revolution and the modern operational excellence movement were launched coming out of a devastating recession after World War II, when the company’s future was on the line.  A pact between leaders and staff resulted in what was equal parts cultural – who do we want to be together – and operational — a commitment to be excellent by a disciplined approach followed by everyone, every day.  Alcoa’s turnaround in 1987 came when a new leader made a similar pact with every worker in the entire organization.  By making safety a precondition of all other work, and everyone working every day in visible disciplined ways to make safety a precondition, we can not only survive as a company but become the best in the world at everything we do … a model of habitual excellence.

We lost that Alcoa leader on April 18, 2020.  Paul O’Neill was Value Capture’s non-executive chairman and constant source of inspiration and guidance.  But as he would be the first to remind, the leadership compact he forged, and Toyota’s, remains open to all of us.

Who are the healthcare leaders who will connect with their teams to create their own equivalent revolution coming out of this crisis? I hope it is you.

Paul O’Neill and His Playbook for Habitual Excellence [Video]

Recently, I went for a brisk 50-minute walk on a sunny morning and my companion the voice of the late Paul O’Neill as I listened to the audio from a video I’m sharing here. Thanks to my colleague, Vickie Pisowicz, for sharing it with me.

I listened to it and you can watch it here.

He was sharing reflections on Alcoa’s journey, but it’s a playbook for CEOs to follow.

Elements of this include the CEO:

  • Making a commitment that nobody should get hurt at work (the same could be said about patients)
  • State that you want to be the safest company in the world (and the best at everything that you do)
  • Stopping the use of the word “accident” (which makes it sound inevitable or something God wanted) and use the word “incident” instead
  • Realizing that only they can create the environment and the culture that allows people to do great improvement work and taking action toward that end
  • Visiting sites and making this commitment to workers
  • Saying that you won’t make anybody budget for safety improvement — you’ll find a way to pay for it
  • Giving out your personal phone number and tell employees to CALL you if the safety commitment isn’t being met by local managers
  • When you get that first phone call, thanking the employee and follow up immediately with the plant manager (or hospital CEO)
  • Note: word will spread that you are following up on your words — this will be a big benefit to your culture change efforts
  • Setting goals at the “theoretical limit” (such as zero harm) but do not “bludgeon” people with that goal — use it as an inspirational and aspirational goal
  • Encouraging root-cause problem solving instead of papering over problems
  • Practicing extreme transparency with information across the organization, including reports about injuries that start with the worker’s name (to humanize the situation and keep it from being just numbers)
  • Publishing employee injury data publicly on the company website
  • Learning to “ask questions like a third grader” and to keep asking “why?”
  • Creating a more egalitarian culture (questioning why executives get perks like free coffee and danish that are not offered to factory workers)
  • Focusing on safety is something that everybody can commit to — it’s “unarguable.” You’ll end up on the path to habitual excellence related to everything the business does.

“An organization is either habitually excellent… or it is not. There is no partial habitual excellence.”

Paul H. O’Neill, Sr. (1935 – 2020)

There’s more to it, but those are the things that come to mind without having taken notes during the walk.

What other key points or quotes stand out to you? Leave a comment on the post.

Listening to Mr. O’Neill, I realize he’s describing a system that’s built on principles. If you don’t share the principles (such as “nobody should ever get hurt at work”) then I wouldn’t expect his method to work. If you try to copy just part of the system (getting a goal of zero), I also wouldn’t expect this approach to work.

What would your hypothesis or expectation be if your organization got a new CEO who followed this approach?

Could a CEO who had been at an organization for a while change their spots and start following this approach?

My suspicion or assumption is that you’d have to be an outsider and new to the organization, as was Mr. O’Neill (technically he had been a board member of Alcoa, but coming in as CEO was his first job as a true insider).

What other reflections or thoughts come to mind from this video?

I admire the clarity of purpose that Mr. O’Neill had. I appreciate his approach and his true respect for every employee (going beyond their physical safety). He wasn’t just about words… it was also about action and leadership.

And remember this chart that shows how safety improved along with the Alcoa stock price (click for a larger view):

And safety continued to improve after his departure — a sign that this approach was not just due to one charismatic leader. Mr. O’Neill emphasizes that the organization and the people did this. He played an important role as leader (and he says the same thing about Dr. Rick Shannon who introduced him before this speech six years at UVa.

Here is my podcast with Dr. Shannon, also from 2011, about the time of this video.

Dr. Shannon was, of course, deeply influenced by Mr. O’Neill during his time in Pittsburgh.

Like Dr. Shannon, all of us at Value Capture continue to be deeply influenced by the words and actions of Mr. O’Neill and we take seriously the responsibility to keep the charge.

A version of this was originally published at LeanBlog.org

Podcast Trailer: Habitual Excellence, presented by Value Capture

Episode Synopsis:

This trailer provides a preview of the types of voices and content that you’ll hear in our podcast. Appearing are Geoff Webster, Paul H. O’Neill, and Ken Segel. The host is Mark Graban. You’ll hear a preview of the key themes of the first few episodes, along with powerful leadership principles that are required to create a state of habitual excellence in your organization.

Scroll down to see how to subscribe and to read a transcript.

Click to visit the main Habitual Excellence podcast page.

Listen:

Future Episodes:

In the first episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)

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Transcript:



Habitual Excellence Episode #4: Ken Segel on Zero Harm and Theoretical Limits

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Episode Synopsis:

Welcome to the fourth episode of Habitual Excellence, presented by Value Capture.

In this episode, Ken Segel, co-founder and managing director of Value Capture, has a conversation with host Mark Graban on the theme of zero harm. The late Paul O’Neill, the founder of Value Capture, always talked about the need for leaders to set goals that are at the “theoretical limits” of performance. How can such goals be aspirational and inspiring to everybody in an organization? How are these goals a necessary contributor to habitual excellence?

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions such as:

  • Geoff Webster, on Habitual Excellence
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • Bill O’Rourke, retired Alcoa executive
  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • More interviews and discussions, coming every week

Subscribe:

To make sure you don’t miss an episode, be sure to subscribe today! Please rate and review the podcast.

Listen on Google Play Music

Automated Transcript (click anywhere to play):



Habitual Excellence Episode #6: Bill O’Rourke on Using Paul O’Neill’s Playbook

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Episode Synopsis:

Welcome to Episode #6 of Habitual Excellence, presented by Value Capture.

Today, host Mark Graban is joined by Bill O’Rourke, a former Alcoa vice president who was deeply influenced by our founder (and former Alcoa CEO), the late Paul O’Neill. In the episode, Bill shares his recollections and reflections about Mr. O’Neill joining Alcoa and why he calls him “the most enlightened leader I’ve ever known.” Bill also talks about how he used Mr. O’Neill’s “playbook” when he led the Alcoa business in Russia.

Bill is the author of the book The Business Ethics Field Guide: The Essential Companion to Leading Your Career and Your Company to Greatnesswhich has a foreword by Mr. O’Neill, which includes this: 

“Everything a leader does is examined by the people in the organization.  Your people will compare what you do with what you say.  What you do defines you and becomes the default standard for your organization.”   

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

Subscribe:

To make sure you don’t miss an episode, be sure to subscribe today! Please rate and review the podcast.

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Automated Transcript:



Habitual Excellence Episode #7: Dr. Lisa Yerian on Patients First at Cleveland Clinic

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Episode Synopsis:

Welcome to Episode #7 of Habitual Excellence, presented by Value Capture.

Today’s guest is Lisa Yerian, MD — the Chief Improvement Officer at Cleveland Clinic. Host Mark Graban and Lisa discuss the long-standing “patients first” mindset and why it doesn’t mean “patients only.” Cleveland Clinic is also focusing on becoming the best place to work, in addition to becoming the best place to receive care.

Lisa also talks about their “tiered daily huddles” and how those begin with a focus on quality and safety. How does “patients first” connect with the idea of “habitual excellence” and other work they are doing with Lean and continuous improvement? 

To learn more about the Cleveland Clinic Improvement Model, visit their website or email improve@ccf.org.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • John Collodora, on Sensitivity to Operations (HRO)
  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • John Toussaint, MD on Lessons from Paul O’Neill
  • More interviews and discussions, coming every week

Subscribe:

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Automated Transcript:



Habitual Excellence Episode #9: John Collodora on “Sensitivity to Operations” (HRO)

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Episode Synopsis:

Welcome to Episode #9 of Habitual Excellence, presented by Value Capture.

Our guest is John Collodora, a Value Capture client advisor who brings deep and diverse experience to the Value Capture team, with 25 years in manufacturing, supply chain, and healthcare before joining the firm.

Paul and host Mark Graban discuss the second trait of High Reliability Organizations, “sensitivity of operations.” What does this phrase mean? What’s the context for why this is important, especially in healthcare? John also shares some examples of this trait in practice. You can also listen, in Episode #3, to Tony Millian talk about the first trait, “preoccupation with failure.”

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • John Toussaint, MD on Lessons from Paul O’Neill
  • Ken Snyder on the Shingo Model
  • More interviews and discussions, coming every week

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Transcript:

Habitual Excellence Episode #10: John Toussaint, MD on Being Influenced by Paul O’Neill

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Episode Synopsis:

Welcome to Episode #10 of Habitual Excellence, presented by Value Capture.

Our guest is John Toussaint, MD, one of the leading voices in the global “Lean healthcare” movement. He’s the author of three Shingo-award winning books, including Management on the Mend. His next book, co-authored with Kim Barnas, will be released soon and it’s titled Becoming the Change: Leadership Behavior Strategies for Continuous Improvement in Healthcare.

Dr. Toussaint and host Mark Graban discuss his reflections on his time learning from the late Paul O’Neill, the founder of Value Capture. What does “habitual excellence” mean to him? Why was Paul one of the first people John called when he launched his non-profit organization, Catalysis?

Click to visit the main Habitual Excellence podcast page.

 

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • Ken Snyder on the Shingo Model
  • More interviews and discussions, coming every week

Subscribe:

To make sure you don’t miss an episode, be sure to subscribe today! Please rate and review the podcast.

Listen on Google Play Music

Transcript:



Habitual Excellence Episode #11: Dr. Eric Dickson on CEO Leadership During Covid-19; No Layoffs, No Furloughs

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Episode Synopsis:

Welcome to Episode #11 of Habitual Excellence, presented by Value Capture.

Joining us today is Eric W. Dickson MD, MHCM, FACEP, he is President and Chief Executive Officer and UMass Memorial Health Care. In today’s episode, Eric talks about Lean as a transformation strategy and a management system — why it’s not just frontline problem solving. That said, what are the parallels between Lean problem solving and strategic thinking. What’s the importance of focusing on safety and how did Paul O’Neill influence his thinking.?

Host Mark Graban also asks Eric about his commitment to no layoffs and no furloughs during the Covid pandemic and how that came to be.

Click to visit the main Habitual Excellence podcast page.

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Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • Kathryn Correia on a CEO’s role in Lean Transformation Strategy
  • Ken Snyder on the Shingo Model
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #13: Steve Spear on Learning with Paul O’Neill and “Yay Science”

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Episode Synopsis:

Welcome to Episode #13 of Habitual Excellence, presented by Value Capture.

Joining us today is Steven J. Spear, a Senior Lecturer at MIT’s Sloan School of Management and Senior Fellow at the Institute for Healthcare Improvement. His book, The High Velocity Edge, has won the Philip Crosby Medal from the American Society for Quality (ASQ) in 2011. Spear has a doctorate from Harvard Business School, a master’s in engineering and in management from MIT, and a bachelor’s degree in economics from Princeton. He’s also the creator of See to Solve and is principal in his firm HVELLC.

Today, host Mark Graban talks to Steve about his experiences working with, and learning from, Paul O’Neill during his time as CEO at Alcoa. Steve connects important dots between organizations like Toyota, the U.S. Navy, Alcoa, and healthcare organizations that are seeking habitual excellence. How can we learn and evolve rapidly in this era of Covid-19? They talk about this and more, in an episode that was recorded in mid May.

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Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Patrick Anderson, CEO of Rural Alaska Community Action Program, Inc. (RurAL CAP)
  • Jose Bustillo, client advisor with Value Capture
  • Ken Snyder, executive director of the Shingo Institute
  • Paul Pejsa, director at Catalysis
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #14: Paul Pejsa on Covid-19 Success Stories in Healthcare

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Episode Synopsis:

Welcome to Episode #14 of Habitual Excellence, presented by Value Capture.

Joining us today is Paul Pejsa, he is the director of the Catalysis Healthcare Value Network, based in Appleton, Wisconsin. Today, Paul talks with host Mark Graban and shares examples of health systems that are members of the CHVN who have done really outstanding work during the Covid-19 pandemic. Note, this episode was recorded in late May.

Organizations mentioned here include  Bryan Health (Nebraska), Nebraska Methodist Health System, UMass Memorial Healthcare, Integris Health (Oklahoma), Torrence Memorial Medical Center (California), and Children’s Mercy Hospital in Kansas City. How did they use daily huddles, A3 problem solving, and other Lean Management System practices? Listen to find out… (or watch)…

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Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Patrick Anderson, CEO of Rural Alaska Community Action Program, Inc. (RurAL CAP)
  • Jose Bustillo, client advisor with Value Capture
  • Ken Snyder, executive director of the Shingo Institute
  • Rhonda Brandon, Chief Human Resources Officer, Duke University Health System
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #12: Kathryn Correia on a CEO’s Role in Better Delivering the Mission

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Episode Synopsis:

Welcome to Episode #12 of Habitual Excellence, presented by Value Capture.

Our guest is Kathryn Correia, the president and CEO of Legacy Health. Host Mark Graban asks Kathryn about how does she, as an outside CEO with experience leading other Lean transformations, decide which approach to take (and why does she avoid the word “transformation”)? Kathryn also talks about “finding the soul” of an organization — what resonated with the board and what resonated with staff? She also talks about how Value Capture has adapted with Legacy Health during the Covid-19 pandemic. How does Kathryn work to “model the way” as a leader, making sure people are safe?

Click to visit the main Habitual Excellence podcast page.


Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • Patrick Anderson, CEO of Rural Alaska Community Action Program, Inc. (RurAL CAP)
  • Steve Spear, professor at MIT Sloan
  • Jose Bustillo, client advisor with Value Capture
  • Ken Snyder, executive director of the Shingo Institute
  • Paul Pejsa, director at Catalysis
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #8: Dr. Paul DeChant on Physician Burnout and Covid-19

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Episode Synopsis:

Welcome to Episode #8 of Habitual Excellence, presented by Value Capture.

Joining us today is Paul DeChant, MD, MBA, co-author of the book Preventing Physician Burnout: Curing the Chaos and Returning Joy to the Practice of Medicine 1st Edition. He is also a former healthcare CEO and currently serves as a Lean consultant and an executive coach. Learn more about him and his work through his website.

Paul and host Mark Graban discuss burnout — what is it and what are the causes and the impact? What can be done to reduce or prevent burnout, or if it’s occurred, recover from it? Does Paul think burnout is worse during the Covid-19 era?

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions with guests including:

  • John Collodora, on Sensitivity to Operations (HRO)
  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • John Toussaint, MD on Lessons from Paul O’Neill
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #5: Geoff Webster on the Meaning of “Habitual Excellence”

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Episode Synopsis:

Welcome to the fifth episode of Habitual Excellence, presented by Value Capture.

In this episode, Geoff Webster, co-founder and managing director of Value Capture, has a conversation with host Mark Graban on the theme of “habitual excellence,” a phrase used by our founder, the late Paul O’Neill. What is habitual excellence? How do leaders create the conditions for habitual excellence in an organization? We’ll discuss this and more.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions such as:

  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • Bill O’Rourke, retired Alcoa executive
  • Steve Spear, on Learning From and Collaborating With Paul O’Neill
  • John Toussaint, MD on Lessons from Paul O’Neill
  • More interviews and discussions, coming every week

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Habitual Excellence Episode #2: Ken Segel on Leadership in the Covid-19 Era

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Episode Synopsis:

Welcome to the second episode of Habitual Excellence, presented by Value Capture.

Today, Ken Segel, co-founder and managing director of Value Capture, reads a blog post that he recently published. It’s a thought-provoking examination of what’s needed from leadership if we’re going to create safety in healthcare organizations.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In the next episodes, you’ll hear guests including:

  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • More interviews and discussions

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Habitual Excellence Episode #3: Tony Milian on “Preoccupation with Failure”

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Episode Synopsis:

Welcome to the third episode of Habitual Excellence, presented by Value Capture.

Today, Tony Milian, a senior advisor with Value Capture, talks about High Reliability Organizations. One important trait of HROs is a “preoccupation with failure” and Tony explores that theme in a conversation with Mark Graban. What are some examples of this trait and how can this help us in our journey to zero harm?

Here is the video that Tony mentions in the podcast:

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • Bill O’Rourke, retired Alcoa executive
  • More interviews and discussions

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Habitual Excellence Bonus Episode: Paul H. O’Neill Sr. on Dignity and Respect

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This short bonus episode brings us the words of the late Paul O’Neill, Sr., the founder of our firm, Value Capture.

The clip is part of Episode #1 of the podcast series.

Scroll down to see how to subscribe and to read a transcript.

Click to visit the main Habitual Excellence podcast page.

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Habitual Excellence Episode #1: Paul H. O’Neill Sr.

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Episode Synopsis:

Welcome to the first episode of Habitual Excellence, presented by Value Capture.

Today, we honor the memory (and the words and actions) of Paul O’Neill, Sr., the founder of our firm, Value Capture. Mr. O’Neill passed away April 18, 2020 at the age of 84.

This episode shares the full audio from a 2009 speech that Mr. O’Neill delivered titled “The Irreducible Components of Leadership Needed to Achieve Continuous Learning and Continuous Improvement.” He talks about the fundamental components of leadership that are necessary for an organization to achieve greatness. The speech is also available on YouTube.

The speech was delivered to healthcare CEOs at an event sponsored by the Tennessee Hospital Association and BlueCross Blue Shield of Tennessee. In the speech, Mr. O’Neill shares what he learned during his career, which included 13 years as CEO of Alcoa, and serving for two years as the Secretary of the Treasury for President George W. Bush. He later co-founded the Pittsburgh Regional Healthcare Initiative and was a tireless advocate for habitual excellence in healthcare through Value Capture and other organizations.

I think you’ll find his words, and the calls to action for CEOs (and other leaders) to be timeless and compelling to this day, and beyond.

Scroll down to see how to subscribe and to read a transcript.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In the first episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)

Subscribe:

To make sure you don’t miss an episode, be sure to subscribe today!

Listen on Google Play Music

Automated Transcript (Click Anywhere to Play Audio):



Principles – The GPS of Pursuing Excellence

“Lean,” derived from the customer-focused, waste-busting Toyota Production System, is the performance improvement methodology Value Capture utilizes in working with clients. Without an explicit principles base, however, research and experience teach that improvements gained only from lean tools are neither sustainable nor systemic.

So what do we mean by “principles-based?” What does that look like, day in and day out?

Let’s start with what a principle is. A principle is a foundational rule, which produces inevitable consequences — whether we think it will or not. Gravity is an easy example. If we toss a ball into the air and we ignore gravity, the ball will fall and might hit us in the head. If we adhere to and act according to the principle of gravity, we will catch the ball and save ourselves a sore head.

Let’s change the example to the most fundamental principle of human interaction:  Respect for Every Individual. (This is also the foundation of the Shingo Guiding PrinciplesTM). Respect is a feeling, essentially, not something concrete. It is usually manifested in a physical way, i.e., a behavior. And the collective behaviors of an organization demonstrate its culture.

For example, if you see a person speaking loudly and pointing a finger at the face of another person, it’s possible Respect is not a core principle of this organization. If you are walking in the lobby and you see a person stop to pick up an apple core from the floor, or you see someone on the shop floor put the “wet floor” sign by a spill, does that demonstrate Respect for others? If you regularly observed these examples, would you think that organization has a culture of Respect, or not?

Principles not only help guide behaviors, they can help guide decision-making. When opportunities or difficulties arise, consider the path that most closely aligns with your principles. If Respect is a core principle, for example, and you need to decide whether to buy a new piece of equipment that produces at a higher rate, but has a higher risk of operator harm, Respect would indicate that you forego this purchase.

Key Questions – What are the core principles upon which your organization is built? Do behaviors you observe, the culture, manifest those principles? Is there a gap between the observed culture and core principles? If you’d like to share any thoughts with us, please email Melissa Moore, mmoore@valuecapturellc.com.

Shingo Principles and Workshop

Ready to dig in and gain a practical understanding of what the Guiding Principles look like in the workplace? Registration is now open for the foundational workshop, Discover Excellence, taking place October 22-23, 2020, in Pittsburgh, Pennsylvania. Learn how the Shingo Model and Guiding Principles provide a structure on which to anchor improvement work and with which to close gaps to work toward sustaining a culture of organizational excellence. Learn more here, or contact Melissa Moore, mmoore@valuecapturellc.com to register.

 

 

 

A Study in Principles That Drive Habitual Excellence

Geoff Webster published A Study in Principles That Drive Habitual Excellence, for the Shingo Institute, in which Geoff lends personal insights to the recent Johnson Institute for Responsible Leadership study of the leadership values of Paul O’Neill.  Geoff provides examples that demonstrate O’Neill’s principles in action.  For example, Geoff writes of the principle, “Respect Every Individual”:

“You may know that Paul used zero worker safety incidents as an anchor of Alcoa’s transformation.  You may not know that Paul specifically selected safety because it is a fundamental pre-condition for respect.  ‘Almost every organization has in its annual report the words ‘people are our most valuable asset,’ but looking at their safety data they have no evidence that it is true.’  By selecting the elimination of worker safety incidents as a pre-condition, and not as a priority to be traded against other values, Paul lives respect every day.”

Geoff concludes his post by saying, “It is a valuable read for any leader pursuing habitual excellence in his or her organization.  I hope this publication from the Johnson Center, and these informal lessons I’ve learned from working with Paul, will add value to your understanding of the Shingo Guiding Principles and to your journey toward habitual excellence.”

“We Have Gotten Too Far From Our People and the Core Processes They Perform Every Day”

Ken Segel relays insights learned by executives of a large academic health system when they went to the frontline to silently observe worker/patient interactions, in this post published on Mark Graban’s Lean Blog.

Insights from Davis Health CEO Vance Jackson on Leading Lean Transformation

Vance Jackson, President and CEO of Davis Health System, talked with Mark Graban in this LeanBlog podcast. Vance discusses how he and his leadership team learn by going to gemba mindfully and purposefully, how A3 problem solving really clicks as a key to developing people to deliver highest quality to patients, safety as an essential focus, the importance of standard work for leaders and staff, and the development of the Davis Way. Of the Davis Way, Vance notes, “It’s more than Lean tools, it’s a frame of mind, it’s a principle that we follow.”

Please listen to hear how this CEO and health system are leveraging principles to better understand their work, and how to continuously learn and improve their work, so Davis patients experience great care.

Shingo Principles + Gritty Resilience = Sustaining a Learning and Improvement Culture

“You have to be resilient and gritty in your pursuit of [safety]. It’s every event, every day, with people committed to understanding what happened and a commitment to make sure it doesn’t happen again,” said Dr. Richard Shannon, Executive Vice President of Health Affairs at the University of Virginia Health System, in his keynote address at the 2017 Bay Area Performance Improvement Network Executive Summit.

Value Capture Principal, Geoff Webster, published this article in the Shingo Institute Blog, describing the key role Dr. Shannon’s principle-based leadership plays in UVA’s achieving lower mortality, higher patient throughput, reduced waste, better supply management, safer patients and staff, as well as UVA’s best financial year ever (2016).

With CEO Turnover at Record Levels, the Traditional Playbook May Not Keep You on Top

At a time when the healthcare market is finally supposed to reward value, the vast majority of health system leaders are responding instead with moves from the traditional playbook. Across the country, we are seeing waves of morale-crushing layoffs, the addition of “facilities charges” to procedure charges without providing any additional value, and mergers and acquisitions intended to increase pricing leverage. At the vast majority of places, what Washington (and patients) have been hoping for – true care integration to improve outcomes and eliminate waste – remains a side show to the real strategy.

Is Anyone Surprised?

No keen market observer should be surprised. Policymakers may point to modest new financial incentives for doing better by patients, but most health care leaders are feeling only margin pressure. And when healthcare CEOs feel margin pressure, they go to what they know – cut costs and look for pricing leverage. That’s always been what shows your board you are making the tough financial decisions. Also, leverage based on scale works in local health care markets (a fact which the feds have consistently ignored), and cuts have been what moves the numbers toward black when they hit the financial statements (if we ignore the medium and long term consequences).

But will the tried and true be enough this time? Whether or not Washington “wakes up” and puts the real pressure on, the signal sent by record CEO turnover and other tea leaves suggests that if CEOs want to keep their seats, they should consider moving value-creation for the patient from side project to “the” strategy.

The Peril of the Traditional Playbook for CEOs

Here’s the evidence, followed by a single powerful step for CEOs and their teams to get refocused on “the right stuff.” See if you agree with my description of the peril for CEOs, and my suggested initial Rx.

First, if you’re not the biggest fish in your pond, you can’t win with cuts or leverage.

  • The big fish have more capital than you do, so you start with a deficit at the leverage game.
  • Because job cuts destroy value from the minute they are executed, by profoundly harming morale and leading employees to hide process problems and inefficiencies, they hurt you – not help you – over the medium and long run. You are eating your seed corn when you need to be generating increasing amounts of cash flow internally.
  • Consolidation is increasingly likely to cost you your job. New ACHE data show dramatic increases in CEO turnover in 2013, to the highest levels ever measured. Of course, it’s the smaller players who are moved out first.

Second, even if you are the big fish in a local market, the top-down leverage strategy is not the right thing to do, for anybody, and will leave you without the knowledge and depth you’ll need if payers really figure out how much rxprednisone waste is in the system.

  • Playing the leverage game distracts your team from the job of getting it right for patients.
  • It sends morally ambiguous signals that rob your staff and employees of a sense that they work for a place that does the right thing.
  • Exploiting your local market position may increase revenue for now, but it leaves payers, communities and individuals reeling under unsustainable costs and looking to change the status quo.
  • Job cuts damage your ability to sustain performance for the same reasons they hurt smaller players.
  • By relying on leverage and job cuts instead of process excellence, you are depriving yourself of the chance to build the knowledge and skill to survive when payers stop paying for even more of the waste in the system. Think about it. If the past couple of years’ 5% drop in revenue sent your institution into a crisis, will you know how to thrive when you have to increase value to patients by 20% to survive?

What’s Held Us Back?

Why haven’t more leaders bet on an all-out embrace of creating value for your customer as THE strategy already?

Most leadership teams have funded and cheered for improvement work, but never committed to the kind of deep personal involvement and leadership required to drive meaningful amounts of waste out of the system as a consequence of getting the process right for the patient. So “improvement” has never really moved the needle at most places, leaving leaders not knowledgeable or confident enough (ironically) to bet on that approach now.

A Single Step That Can Change Everything

To begin to overcome that legacy, here is a single step CEOs can take to start getting themselves focused on the playbook that should win in the long term:

Get out and silently observe one of your key business processes end to end, through the patient’s and then the staff’s eyes. You will see that at least 50% of the total time, materials and effort invested by your team does not add value to the patient, yet the staff will likely be very stressed by process problems that they don’t have support to fix. Unlocking that 50% opportunity is your largest business opportunity, and it can only happen by focusing your leadership and support squarely behind your people to do it. If you don’t know how to make your staff feel professionally safe while you observe in this way, or don’t know how to look for process problems and waste afflicting your teams’ ability to serve the patients, find an experienced coach with “eyes to see” to help you. Take just this one simple step to start, and then commit to the full journey suggested by what you learn, and there is hope you could be in the CEO seat, and feel good about it, for a long time.

What is Lean and what results can you produce with it?

Properly executed as a core of a complete business strategy, “Lean” or “Deep Lean” can produce a trifecta for a healthcare organization – dramatically improving quality, financial results and satisfaction among both patients and staff. However, most hospital “Lean” implementations fall far short of what is possible, and some work labeled “Lean” ignores key principles needed for success.

What is “Lean” and What Results Can We Produce With It?

“Lean” is the too-simple label applied to the ideas, principles, and operations tools developed first in post-war Japan by Toyota and then competitors that have spread across the globe and from industry to industry. When well executed, “Deep Lean” engages everyone in the organization around a set of principles that allow them to design and improve all processes to have the stability and structure to meet customer need without error, without waste, and with the least possible lead time (leading to greater throughput).

Is Lean a Quality Improvement Methodology or a Business Strategy?

Most early hospital efforts failed for predictable reasons – chiefly that leaders thought Lean was something to be implemented solely in operations, below leadership levels, as a series of quality improvement projects – all of which lead to limited and decaying impact. Lean inexorably reveals problems and waste and tensions the organization to work differently as a complete system to eliminate those conditions – if leaders aren’t keenly focused, managers are forced to “dumb down” and weaken Lean as a matter of self-preservation. Even worse, many leaders “deploy Lean” solely to achieve cost savings, without providing the staff involved with professional safety. This poisons the well for far-larger ongoing gains in quality and cost. Happily, in recent years, a few health systems have undertaken much more significant performance transformations, centered on Lean principles, with leaders “leading the learning” and anchoring it to their business case in all dimensions. Not surprisingly, they are achieving more significant and durable results.

Results

Between 2003 and 2009, Thedacare in Appleton, Wisconsin improved its quality measures while moving its operating margins from 2.5% to 6%, increasing its bond rating from A2 to A1, and increasing cash on hand by $105 million. At Thedacare, Deep Lean is not a project, it is the way work is done. Denver Health, a public hospital system, reports improved quality, improved morale and $45 million in documented savings that have allowed it to avoid a single layoff during the current recession. At the Hospital of the University of Pennsylvania, work supported by Value Capture but driven by the nurses and physicians of the oncology units saved 28 lives and $2.2 million and was documented by CNN as a model for what “true health care reform” should be.

Where Should Lean Fit As Part of a Comprehensive Hospital Strategy?

Deep Lean is most powerful when it is deployed as part of a comprehensive plan to sharply increase the performance of a hospital or health system. Chances for success are increased dramatically when leaders build a foundation for Lean first, with such building blocks as values-centered goals to anchor the process for staff, transparency to create the right culture for problem solving and rapid knowledge transfer, and giving everyone “eyes to see” waste and problems in process design. (This leadership framework is the focus of a seminar for CEOs and those who wish to become CEOs offered by leaders from Thedacare, Value Capture and other proven peers and thought leaders.)

What Are a CEO’s Keys to Success With “Lean”?

1. Frame it in your mind as a whole-organization leadership system, not a set of quality-improvement projects and tools.

2. Be eager to “lead the learning.” Thedacare’s President Kathryn Correia says “How can I lead what I don’t know?” Being in front of the learning lets you be more confident about what to do next, and also models the core behavior you need from everyone.

3. Define the measures of success (quality/safety, cost and lead time/throughput) and maintain the focus on customers and business value on all those dimensions. Lean correctly focuses on radically improving the processes that produce the results, but the leader has to make sure people are paying attention to the results, through regular checks, reviews and consultations.

4. Go to “Gemba” say the Japanese – where the work is actually done. Lean will help you focus the whole institution on where the value is actually produced in the organization, the front line, but only if you consistently model getting there and seeing, asking, listening, learning and coaching.

5. Focus on maintaining a safe environment – emotional, professional and physical. Lean forces a lot of problems into the open that normally just “flow on by.” Each layer of management below you will be very threatened if you are not actively generating positive energy around the problems “surfacing” and modeling the energetic engagement with Lean principles-based problem solving.

6. Be deeply involved. Obviously, there is a lot of “doing” that others will lead, but no staff person should have cause to think you have “delegated” Lean. This is a critical mistake most hospital CEOs make. Paul O’Neill, our chairman, says “show me a company that brags about its equal opportunity office, and I will show you a company without equal opportunity.” The same is true for Lean – it needs to be “the way we are learning to run our business, starting with me.”

7. Coach, encourage and support – especially your direct reports (all of them need to be deeply involved). The feel in the executive suite should be of you putting your arm around each member of your team, saying “this is the way we are going. It’s not going to be easy, but we’re going to get there together. Now let’s have at it.”

8. Establish an incentive system – recognition first (and always maintained); and shared financial incentives once you can confidently base them on true value creation vs. gaming and sub-optimization.

9. Regular communication, usually with a concrete teaching and support focus.

10. Always work to draw more people and areas into the doing. And nurture the ideas of the doers!