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Sustainability: Moving from Common Sense to Common Practice
2016 International Conference
Leesburg, VA - National Conference Center

September 18th - 21st

The "Bad Luck” TOC Obstacle – Management Churn

Kevin Kohls - Continuous Improvement Director, Rex Materials Group

1. Identify a "Giant” Not a Choopchick.
In a large organization, one thing is unavoidable – Management Churn. It may vary from organization to organization, but at GM and other large manufacturing companies, my experience is that occurs every two years. Any new continuous improvement method, including TOC, must come up with methods to overcome Management Churn.

2. Identify the Enormity of the Area not Addressed by the Giant.
Successful TOC implementation actually reinforces this phenomenon. Internal champions that had success were promoted to other areas, often the non-constraint area. The effort in the original area usually failed as the new leader implemented a different improvement method that s/he was familiar with. A failed effort would cost the champion – reassignment, demotion, or losing their job. TOC has looked hard at marketing the TOC solutions, but it needs to spend just as much or more time overcoming one of the biggest obstacles for long-term success – Management Churn

3. Get on the Giant’s Shoulders.
In 1987 I worked at the new Detroit Hamtramck Assembly plant, whose throughput was poor. The consensus was the plant would never get to the desired rate, for many reasons. But a program developed by GM Research and Development, call C-Thru, quickly identified the bottleneck. Taking that and a copy of The Goal got me started, and the plant throughput improved until they were hitting the goal everyday. So Goldratt’s TOC methods worked. Over time we expanded our efforts through the division, then to the company, and then globally. The process also ended up in the Simulation Design group. A new manufacturing system in an Assembly plant can’t be approved until the Simulation is finalized and the plant design was approved. Start up times fell from 6 months to 6 weeks. Goldratt’s TOC methods had established a significant paradigm shift.

4. Identify the Conceptual Difference.
Between the reality that was improved so dramatically by the giant, and the area untouched.

TOC’s new paradigms are dramatic – so much so, that is hard to believe that we had the old paradigm. This new thinking is attractive to leadership and its internal supporters. With so much to learn and implement, management often turns to outside consultants to teach and help implement TOC solutions. Consultants make pitches, leaders obtain funding, PO’s are generated, plans are established, training happens, and the new paradigm begins to show promising results.

But then there is an organizational change. The promising TOC solution suddenly loses traction and falls into a death spiral, ending when the contract for the TOC consultants lose their funding. Reflecting on the failure, those involved might bemoan their bad luck that there was an org change and the failure of the new leadership to even attempt to learn even the basics of TOC. Their conclusions – there was nothing we could have done to prevent this failure.

This is the area untouched – Management Churn is a reality in Medium and Large companies to the point that it almost predictive. How do we deal with this common cause? How does our thinking have to change?

5. Identify the Wrong Assumption.
-Valid in the area it worked – not valid in the area where it doesn’t.

The wrong assumption is that the leadership in public companies that supports TOC will still be in a position to support it in two years from the start of the project.

This assumption is not true in small or medium sized private companies, where the leadership is often one or two main leaders who own the company. They have a long term commitment to their company, and will be in a supportive leadership position for many years. TOC implementations are often easy, and a focus of much of TOC’s Consultants marketing.

Medium and Large public companies don’t have this stability in leadership. Many leaders are competing for the small number of promotions that are available. C-Level leadership is always on the look out for future leaders that have already generated success for the company. Those promoted are expected to bring the same type of success to their new positions in a reasonable amount of time – about two years in most companies. Thus, any methods they implement must show results and be well established process in less than two years.

The exception to this occurs when the previous TOC champion is promoted upwards – he essentially takes his boss job, and will still be able to support TOC. The TOC work may get another two years to show success. We might be able to predict a periodic org change, but we can’t determine where "all the monkeys will be after we shake the tree.”

6. Conduct a Full Analysis
After reviewing other methods with strong scientific backing in other publications and leveraging my own experience, I have concluded that the following success factors are critical for a TOC implementation:

Fast Implementation. Successes always have their tools implemented quickly. At GM, the ability to use C-Thru (a fast bottleneck identification tool) and collect data easily allows us to find a bottleneck quickly. A standard routine – the Throughput Improvement Process was implemented after the bottleneck was found. Now we could cull the hundreds of ideas to improve throughput down to a few. We then focused our improvement efforts there. The effect was immediate throughput increase. The process had simple key points – Find, Focus, Fix. Management Churn happened, but with TIP already in and entrenched, those changes had little or no impact. So getting a TOC process as a standard method in less than two years is an important success factor, and usually defeats Management Churn.

In the same company, an equally promising TOC Process called Enterprise attempted to implement the retail replenishment solution in Cadillac production and its dealer network. Initial results were promising and the project moved forward. But then the effort started to fall apart – at about two years. Successful leaders in the Enterprise project were moved to other troubled areas. New leaders didn’t understand the new paradigm, and stayed with their existing paradigm. As the project got caught in the downward spiral of so many other improvement methods, the plug was pulled to prevent throwing good money after bad. You can make many arguments of the success and failure, but its difficult to deny the impact of Management Churn.

In my latest work at RMG, I had the benefit of TOC trained leadership and a small, private company. Nevertheless, I felt the need to get their Critical Chain process installed and established across our three sites in one year. I want to build on this success to be able to install the next tools and methods. Thus, in order to reach my internal goal, I have to increase my throughput of installing TOC tools.

Create Motivation – While leadership or the champion might buy into the process, the team involved in implementing the process had to be highly motivated to make it work. Even if the goal was to make money for GM, those that put in the process would not see any direct monetary benefit. So how could TOC create motivation for those actually doing the work? It comes down to the three concepts from Dan Pink’s Drive. A purpose that was not The Goal was needed. It varied by groups, but much of it was a chance to get involved with something that made sense and could make a difference. This group was typically small – one to four people who wanted to achieve the purpose. They ended up with a lot of autonomy to make it happen. It was their work that made the implementation happen quickly, and their efforts that cause the process to be entrenched. Finally, this small successful group often wanted to learn more – to master the skills they had acquired. Many of these internal experts would become Jonah’s.

In organizations that failed, teams were there "because they were told to be there.” They were often experienced people who had seen many failures from consultants who claimed to "have the answer.” Most of these experienced people just wanted to know what check boxes they had to fill before they could get back to their old jobs – and habits. Most of the time was spent trying to figure out what the bosses wanted, and not work to reach the Goal that had been laid out. They lacked Purpose, Autonomy and Mastery.

Establish Routines. After reading the Power of Habit, I realized that besides being fast and using a small team of motivated implementers, I had inadvertently established routines (or habits) in the execution of the Throughput Improvement Process. I realized the trigger was the same – the need to find out everyday what happened with production and why it was the way it was. The (perceived) reward was see the upward tick in throughput – every day until we reached our goal. The "craving” was for positive results that would alleviant the negative pressure that was being put on everyone in the plant. It matched the success factors validated in the Power of Habit -- The trigger was the same, and the desired reward was the same, the craving was the same, but the routines that were executed had been changed.

Part of the solution, then, is to understand and apply these success factors, and overcome obstacles that prevent them from being used. Should we market a large-scale holistic approach that may not survive Management Churn or market and implement them as if they are links in a chain, with each link going in quickly and successfully? Should we pay a competitor for their software, training, or expertise to speed implementation? Should we create an autonomous group of internal resources who have a strong purpose and want to become TOC experts, and essentially replace us? If we want to overcome Management Churn, we have to look at these success factors, and search outside of our box for other methods that could help increase the throughput of our implementations.

STEP 1:What to Change? The long term viability of a TOC implementation

STEP 2: What to Change to?
A TOC implementation that is installed quickly, has highly motivated implementers, and becomes entrenched quickly in the organization.

STEP 3: How to Cause the Change? Validate the existence of churn in the target organization, and if it is there, change the implementation. Emphasize a rapid implementation that becomes entrenched quickly, assuring success before the next Churn occurs.

In addition to addressing Eli’s three change questions, each submission will include the following:

A) Why Was There a Need for change? Management Churn was not understood as common cause problem for implementations, but was thought of as a special cause problem that could not be predicted.

B) How Do you Measure, Refocus, Sustain and Grow the Change?

Measure – Beside the desired metric, we would measure the length of the implementation, with a goal of making a process stable in under two years. We need high implementation throughput.

The refocusing has to be on implementation speed and how to make it quicker – much quicker – than today.

The sustainability comes with the entrenchment of successful methods leverage The Power of Habit.

Growing the change comes from a shift in implementation scope – start small, think big. Make this implementation stable to build on it and realize your master plan.

Three Learning Objectives:
1. Understanding what Management Churn and how it is not a special cause, but a common cause of failure in many TOC implementations.
2. Understand the key method to defeat is to implement a TOC process quickly using highly motivated internal team members.
3. The process has to be more than showing some good results – it must be entrenched in the organization so that it is an established process.

Kevin Kohls has spent over 30 years improving manufacturing systems, from working in both machining and automotive assembly plants and implementing the Theory of Constraints. His team combined automatic data collection, bottleneck analysis, Lean, and Red X (a statistical methodology similar to Six Sigma) into TIP – the Throughput Improvement Process. As an executive, his teams helped validate the design of new automotive plants using simulation, Throughput Accounting, Lean, and TOC. His efforts have generated billions of dollars of improved profitability in GM and other companies. This work and those of his peers were recognized by INFORMS, which awarded GM with the prestigious Franz Edelman Award for 2005. He has also been given both the Chairman’s Honors Award and the Boss Kettering Award for Innovation. As a consultant, he has worked with automotive suppliers, Johnson & Johnson, Magna, Dollar/Thrifty Rental Car, Blue Cross Blue Shield of Michigan, the Detroit Medical Center, Spirit AeroSystems, and many other companies.

Kevin now works as the Continuous Improvement Director at Rex Materials Group in Howell, Michigan, where has significantly improved both their Manufacturing and Project Management process.

Kevin received his undergraduate degree in Electrical Engineering from the General Motors Institute (now Kettering University) and a Master’s degree in Electrical Engineering from Purdue University. He has published his first business/comic book, The Conflicted Middle: Lean Accounting and is currently working on his second book, "Addicted to Hopium”

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