Lean Institute Turkey December 3, 2013 Bursa, Turkey

1. Managing On PurposeJohn ShookChairman and CEOLean Enterprise Institute, USAChairmanLean Global Network Lean Institute Turkey December 3, 2013Bursa, Turkey www.lean.org

2. The State of “Lean” 2013 • We intend to make the world a better place through Lean Thinking & Practice • 25 years of “lean”, 50 years of TPS, 100 years of “flow” • We’ve won some battles • Auto industry • Healthcare • New frontiers

3. State of the LIT Summit 2013 • Great progress since my first visit • Excellent presentations from Turkish cos. • Management level, operations level • New sectors and new regions • Important conversations I heard: • Worker-management divide • National and corporate culture • Terminology – word games • Lean Transformation – how? • “How to make” – “what to make” – “why to make”

4. Purpose Achieved through Processes and People Aligned by Management Management Today Process People Purpose

5. New United Motor Manufacturing, Inc. – NUMMI – built its first car in December 1984 and its last on April 1, 2010. NUMMI kick-started a revolution.

6. Joint Venture

7. Lean Success • in North America • Agreement between Toyota and GM: • Toyota manages the plant via • the Toyota Production System • GM’s “worst” (certified worst) plant: • Quality • Workforce • Former GM workers offered jobs: • Including the old “troublemakers”

9. Results In about one year… QualityBest ever in GM Equal to Takaoka JapanProductivity Best in GM Close to Takaoka Japan

11. Employee development: Some Classroom Mostly OJT or OJD TPS established: Technical - Physicals, “hard” technology - Product, plant layout, etc. Social - “Soft” technologies - Management/people systems (Note: “soft” doesn’t mean “easy”!)

12. Four lessons in leadership from NUMMI: • “Establish mutual trust” • “No problem is problem” • “Lead as if you have no power” • “Before you build cars, build people”

13. It is an Organizational and • A Personal Transformation.

14. Lean Leadership • …is obviously different from the old command and control dictator. • You can see that quickly • It is equally different from the commonly accepted notion of the “enlightened modern manager”  That part is less obvious

15. Define Your Purpose Improve the Work, Develop the People • Get each person to take responsibility to solve problems and improve his or her job • Ensure that each persons’ job is aligned to provide value for the customer and prosperity for the company  Begin with yourself!

16. Leadership Styles

17. Lean vsTraditional Leadership RESPONSIBILITY-BASED AUTHORITY-BASED Focus: The Right to Make the Decision Focus: Make the Right Decision

18. GM Fremont  What went wrong?

19. GM Fremont  What aligned business purpose?

20. Lean is a management system! • to align: • Process • People • Purpose • to create value

21. Lean EnterpriseTransformation Model • What’s the PURPOSE? • How to improve the work? • How to develop the people? • What leadership role and • management system? • What’s the BASIC THINKING?

22. TheToyotaProductionSystem • Best Quality - Lowest Cost - Shortest Lead Time Through Shortening the Production Flow By Eliminating Waste Just in Time “The right part at the right time in the right amount” Jidoka “Built-in Quality” Production Lines That Stop for Abnormalities HEIJUNKA Stability and Kaizen

23. TheToyotaWay • Customer First Continuous Improvement RESPECT For PEOPLE Challenge – Kaizen – Genchi Genbutsu Respect - Teamwork

24. Lean Transformation Model • SITUATIONAL APPROACH • - Value-Driven Purpose - • “WHAT PROBLEM ARE WE TRYING TO SOLVE?” Responsible Leadership MANAGEMENT SYSTEM CAPABILITY DEVELOPMENT Sustainable improvement capability in all people at all levels PROCESS IMPROVEMENT Continuous, real, practical changes to improve the way the work is done Basic Thinking, Mindset, Assumptions That drive this transformation

25. WHAT is our PURPOSE? What situational problem do we need to address? How to improve the work? How to develop the people? What leadership behavior and management system do we need? What is our BASIC THINKING??

26. Transformation Model Questions • What is our purpose or what problem are we trying to solve, what value to create? • How do we improve the actual work? • How do we develop the people? • What role must leadership take and how does the management system support the new way of working? • What basic thinking or assumptions underlie this transformation?

27. Lean Transformation FMEAFailure Mode and Effects Analysis

29. Transformation FMEAQuick-Check

30. Transformation FMEAQuick-Check (examples)

31. State of the LIT Summit 2013 • Terminology “alphabet soup” • TQM • WCM (World Class Manufacturing) • TPS • Toyota Way • Six Sigma • Lean Startup • Japanese terms – two that matter •  KAIZEN • GEMBA

32. Lean…

33. People & Process – aligned by leaders to achieve purpose Leadership People Process Purpose

34. Lean EnterpriseTransformation Model • What’s the PURPOSE? • How to improve the work? • How to develop the people? • What leadership role and • management system? • What’s the BASIC THINKING?