A New approach to Lean

Business901 Podcast Transcription

Implementing Lean Marketing Systems

A New Approach to Lean – Robert Fritz

Copyright Business901

Approaching Lean from a Different Perspective Guest was Robert Fritz

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Robert Fritz has been around the Dr. Deming world, which we discuss in the latter part of the podcast, since the 1970s. You may even recognize his work as he was an instrumental part of the original Systems Thinking Group with Peter Senge. Peter actually offers a marvelous introduction in the book. Robert Fritz, composer, filmmaker and organizational consultant is the founder of Technologies for

Creating. During the past twenty-five years, over 80,000 people in 27 countries have participated in trainings created by Robert Fritz. His insights on the creative process and structural dynamics serve as the foundation of meaningful and lasting change for both individuals and organizations.

In Robert Fritz’s, The Path of Least Resistance for Managers (In the new

edition, Robert has added a chapter on Lean in the update) and calls it “The New Lean.”

http://www.robertfritz.com/index.php

http://www.robertfritz.com/index.php

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Transcription of Podcast

Joe: Yes, how did your workshop go? Were you pleased? Robert: Great. It was really great. It was a three -day

workshop and we covered traditional Lean and then transferred it into the structural approach to Lean and everybody saw how much more efficient it was. The

structural approach toward it created these tremendous efficiencies, we designed many, many systems.

We had a couple of experimental ones, model ones, demo ones but then the rest of them were all from real life, from people in the room. It was really quite extraordinary to see how quickly through more of a compositional approach they could design very, very comprehensive and economy of means types of systems.

Joe: I'm intrigued by it, because are you familiar with the

Toyota Kata work that Mike Rother did because it's very, very familiar. I mean it's very similar type thinking and talk.

Robert: It's not. Not in orientation - not in orientation at all. Joe: Really, why? Robert: I really think, Joe; we're breaking new ground here in

reinventing the whole subject matter. So it's not like theme in variations. It's really like a new song; it's like a new... It's like another generation of Lean.

Joe: I think you are breaking new ground with it. It’s

discovery. It's creating that tension. It's in creating





really that structural tension with the customer.

Welcome everyone; this is Joe Dager the host of the Business901 Podcast. With me today is Robert Fritz. Robert is a composer, filmmaker, organizational consultant, and founder of Technologies for Creating, and author of numerous books, including the bestseller, "The Path of Least Resistance." His latest, I believe is a

re-write of "The Path of Least Resistance for Managers." Robert, I'd like to welcome you and mention that I'm a long-time fan back from the mid-90's in my systems thinking days and where I first ran across your first book and later read your book "Creating". I have to admit that I lost track of your writing and did not read "The Path of Least Resistance for Managers" until probably around 2006 or so, when a colleague of mine

recommended it by saying that, "I wish this would have been the first business book that I've ever read." Give me the elevator speech in why you re-wrote "The Path of Least Resistance for Managers."

Robert: The reason I wrote the first version of it was because

what I was seeing in organization. First of all, let me sort of describe what I mean by the path of least resistance - just the phrase itself because there are two

meanings to that. One is the colloquial meaning, which is the easy way out and the other is the scientific meaning which is an energy moves where it's easiest for it to go.

What I'm referring to is the scientific meaning, not the colloquial meaning. What I saw in organizations over





the years was that organizations were often structured in such a way that success did not always succeed. I saw that there were two patterns that were common. One was advancement in which you set out for something; you get it, and the success becomes a platform for future success, and of course that's how we would all like it to be.

But too often it's not that way. It actually is something that's a different pattern, one that oscillates. That is you set out for something, you get it, and then something happens and there's a reversal, and you lose what you gained. This kind of oscillating pattern we've seen over and over, over the last 30, 40 years in organizations. Where organizations build up capacity and then they downsize, and they build up capacity and then they downsize.

They decentralize decision-making, and then they centralize it again, and they decentralize and centralize. They focus on shareholder return on investment and then they switch to customer satisfaction, and then back to shareholder and on and on we can predict, we can see these oscillations and they are predictable. And the question then became what gives rise to these obvious patterns of behavior. By the way, when you're in those systems, they're not

obvious, but when you back out of the system and just look at it from a longer-range time frame, they become kind of hard to miss.

Joe: Do companies do that when let's say they, change

CEOs? I know in football, it always seems like you have an offensive type coach and what you need is defense





so the next time they hire a new head coach, they always hire the defensive guy then because that's what they're doing wrong. Is that kind of the oscillation that you mean?

Robert: Sometimes it's within the same management system

and sometimes it's the change of a management system which then changes back, which then changes

back. It almost doesn't matter if they're in a structure that gives rise to an oscillating pattern of behavior. The last point I want to make before saying why I rewrote the book is that it is the underlying structure.

By “structure," I'm not talking about reporting relationships. I'm talking about the combination of ingredients of all the elements, the desires, aspirations, reward systems, market, product, etc., etc., etc. All of those things combine to create a like a musical piece.

They combine to create a tendency for behavior. If you don't change the underlying structure, and if it's not an oscillating structure, and if you try to make a change happen within an oscillating structure. We will see the pattern of the change first being accepted and then being rejected. It doesn't matter how good the change effort itself is, it's the underlying structure that will determine whether or not it succeeds.

Joe: Is that the culture? Robert: No, it's something that causes the culture, the

underlying structure. A good example of a change of underlying structure is when Steve Jobs came back to Apple. If you remember at that time, Apple was being talked about as being sold; they were being talked





about as being a clone, like a PC clone. When Steve Jobs came back he changed the underlying structure of the company and of the business strategy and that's led to their tremendous success.

But a change of underlying structure was required and that's what Jobs did when he came back is he really changed not the culture. The culture is a by-product.

People talk about culture, but it's ridiculous because they never ask, "What causes the culture?" It's the underlying structure that causes the culture. If I don't have a change in the underlying structure, I don't have a change in anything. So the best efforts can fail because there's no change of what's causing the behavior that we're seeing.

I rewrote the book because 12 years later after I wrote the original version I had seen so much, I had put so

much to the test of what was in that book. I had so many more examples and it was 12 years later and it really needed an update. So I rewrote it and added probably 100 pages, emphasized leadership more than ever as you and I have just been talking a new chapter on what I'm calling the new Lean or the structural approach to Lean, which is a rethink of Lean management.

Joe: Smaller picture we see it practically day to day. So

what you're talking about doesn't necessarily have to apply just in the big picture, the Apple to Steve Jobs thing, this also plays in day to day work.

Robert: Oh sure. Look, I'll just give you a quick example. If I

reward the sales of folks for building up sales and I reward the factory for making quality and suddenly the





sales overwhelm the factory where their quality goes down and then what happens from that is customers start going away. When they do that, the sales senior sales people say we need more sales; they build up more sales.

Again, there's a cycle where it overwhelms the factory and you have oscillating quality; you have oscillating

sales, and often it's thought that you have a personality conflict between the head of sales and the head of the factory and you don't. What you have is a structure in which rewarding people for doing two different things that are contradictory. The way to change that is to really have the sales goal and quality goal be exactly the same, so we don't make more than we sell more than we can make, but we do sell as many as we can make. But that's thinking

relationally. I'm thinking about quality and sales together versus fragmenting them like most organizations do.

Joe: But that's not really possible. I mean you're always

going to have an unbalance aren't you? I mean, there's never going to be that commonality in that example. I mean there's always . . .

Robert: No, it's not possible if you don't do it. But it's possible if

you do it. And that means I've got to get sales and I've got to get senior management in the room. This is where leadership counts. You know we just don't sort of reward, set these guys off on their journeys, reward them for success and not notice that if one of them is successful, it's going to hurt the other one.





We really have to think about it more systemically, more holistically, more structurally, more like putting a composition together, more like how music is written where the parts really fit together rather than inadvertently fight against each other. When I look at a lot of organizations all, I see is bad composition. By the way, I'm a composer, so my reference is how we write music.

I look at these things and it's really not that complicated both to understand but also to change because what I've got to do then is start to understand the relationships or the networks of relationships and the dependencies of them to each other and then how to better organize the goals.

Joe: I think that's the key understanding the networks. Is

this, what hinders when we talk about the failures of

any type of a transformation and mostly in my world, we talk about a Lean transformation and how often they fail. Is this underlying structure the key to why these failures occur?

Robert: I think there are two keys to why those failures occur.

One is certainly structural. But the other I think is also, there's the nature of the way traditional Lean has been set up that builds in its failure. It's just the nature of how it is. Let me say about traditional Lean, I think

there're some very good things about it and I think when it has worked it has produced some tremendous results.

But as most Lean people know it really is hard to put it into an organization and have it sustain itself. I think there are reasons for that, structural reasons for that.





That's the nature of the beast. I've gotten interested in over the last number of years is to redesign, reinvent in a way, the whole process of Lean so that in fact, it is sustainable, it does work. People are interested in it and enthusiastic about it not from a devotee kind of point of view. Because a lot of times when you look at Lean organizations, you've got

a group of folks who are almost like religious nuts. You know and everything is waste unless it's value to

the customer and their complete purists and there's the rest of the organization who hates them.

Joe: Is this what you mean by the new Lean? What you're

proposing here? Robert: Let me tell. Let me say some of the differences

between traditional Lean and what we're doing. Traditional Lean is problem-based. So the first thing that people do is they look for problems and then they try to eradicate the problems and here's just a fact that all of us as human beings will know. You can solve all of your problems and still not have what you want.

One of the things that, if you notice, in my books, I'm always criticizing problem-solving, particularly if it's chronic. I know managers love problem solving but

probably one of the worst things you can do is spend your time problem solving. What the difference is when we work with organizations one of the first things we do is help them change their orientation from a problem orientation to an outcome orientation. Rather than asking the question, "What are we trying





to get rid of? What problems are we trying to solve?" The question becomes, "What are the outcomes we're trying to achieve?" What are we trying to produce? What are we trying to create?" And that's not just the change of a question it really is a change of orientation. How we think about things. The second step in that orientation is to look at current

reality. Where are we now in relation to where we want to be? That will not only include the problems. It will include everything: the good, the bad, and the ugly. You know, everything there is to see that's relevant to that outcome we need to be looking at and that includes the advantages as well. The question becomes how do we move from where we are to where we want to be and that's really the key to innovation. That's when we begin to understand and

conceive of things, we hadn't thought of before, some of which will be real innovations in process improvements. In a way, limitation of traditional Lean is its problem based.

Joe: One of the things that I want to ask you before you go

on though. It seems a lot of people have problems with identifying current reality. I hate to say it that way but there's always a “What if?” Or “This isn't quite true,” or they paint different scenarios than really accepting

what current state is and you expand on that in your work. I'm not sure which book cause I got them kind of comingled in my mind a little but is there a secret to defining current reality?

Robert: Well, remember one of my famous quotes according to

Google is, 'reality is an acquired taste'. And I think





that's true, but if we start with, "What is the outcome we want?" We're not looking at general reality, "What is existence?" We're looking at reality specific to the outcome. And when we can measure that we measure that.

It's not so much a matter of opinion because, let's say you and I are disagreeing about what it is instead of

fighting it out about who's right and who's wrong, we ask each other questions. "Why are you seeing what you're seeing?" "What do I need to know to understand the difference between what I'm seeing and what you're seeing?" You would ask me the same question, "What do I need to know?" "How are we to explain the discrepancy?" Let's together look and study reality and find out what there is to see and we'll either change our minds or add

insight or we'll certainly come up with a fairly objective understanding, an adequate understanding of where we are in relation to where we want to be. The other thing is we'll test that out over time because as we create a strategy to move that strategy will let us know how well we're doing because what we expect is that reality will change in favor of what we want and if it doesn't we then study it some more to find what we got wrong. So instead of just being an opinion dump

what we really do is become students of reality. We're motivated to do that because we want the outcome.

Joe: It sounds like a great way to enter a sales

conversation. Robert: It's one of the best ways to enter a sales conversation





because the essence of really, real sales professionalism is to find the match between the customer's motivation and desires and the offer that we're making. If it's really a good match, we have a basis of doing business.

The professionals, the really great professional salespeople study the motivation of the customers. I'm

really on purpose now saying motivation rather than need because people don't always do what they need, but they always do what they're motivated to do. So how are they making their choices? How are they deciding what they're deciding? How does that compare to what we're offering and if there's a good match, I call this the secret to good business strategy. Make them an offer they can't refuse. Not in “The Godfather” sense, but in the sense

that it's so good that you really want to say yes to it. Joe: You know it sounds similar to Toyota Kata and then we

have a current condition, a target condition, and we aim for that. Can you explain some differences between what the new Lean is as you describe it and the Toyota Kata?

Robert: Yes, ironically I think that in the process of Lean itself,

there's a lot of waste.

Joe: Oh, you'll stir up someone on that one. Robert: Let me give you an example of this. We just did a

training here last week on the new Lean and I did it with Elsie Ford, who's a traditional Lean expert; she's also a structural consultant, so she's done a lot of our





work and Elsie's role was to sort of educate the folks or remind them of the traditional Lean approaches like Toyota.

She brought with her one of the games that they do; it's the putting a pen together thing and there're instructions and so on, and the way the traditional Lean would work is you go through this exercise and you get

rid of all the wastes and you go through cycles where you get rid of the waste and eventually you can put a pen together. What we did is, after the first iteration, we just designed a process by which to put a pen together. Two or three iterations to perfect it and at the end it was perfect. I mean perfect in the sense, optimal in the sense that you really couldn't make it any better than it was given the assignment and the resources.

Now, I've taken. If you read my chapter in Path for Managers the new version on the new Lean, I've taken all the wastes and turned them in to instead of things to get rid of, things to put into place. One of the lines I think you'll get a kick out of Joe is that I wrote in that chapter is that, "you cannot put traditional Lean in a start-up new company. First, you have to screw it up and then you can put Lean in."

Joe: I highlighted that in the Kindle version. Robert: What we're looking at is how to create processes that, in

fact, are efficient, have economy of means, make a lot of sense. I mean some of the things from traditional Lean I really like are minimizing steps, are minimizing handoffs, some of the ergonomics, where you put





things physically, where we're also looking at economy of transportation, at economy of scale, and economy of production, and workload capacity relationships.

In a way Lean is very much fixing, fixing, fixing versus designing. If you throw away the current process and you rethink it all in terms of the outcome you want but have a really good fix about where you are which will

give you the current process. Okay, current process is current reality. And here's where we want to be. You can rethink the whole process and bypass a whole number of steps. Well, let me give you an example. I work with one company and this is a car dealership. Once a week for 45 minutes I'm in a meeting with their service department guys doing design work. That's it, right, 45 minutes over the last two years, same set of folks, and same number of folks.

In fact, I think they have a few places they need to fill, and they have increased their volume. And just that one group alone, you have to remember this is the garage at the service department; they have increased their efficiency in revenues $500,000 a year, same group of folks.

That's just from little iterations every week improving. .

.designing what they're doing?

First of all, I'm describing where we're really looking at

the outcome we're after, where are we now, how do we move from here to there. The other thing I really like about the notion of Lean is that it's grass roots. That it's people around the table really working it out who are there close to the situation and another, I know you





read this in my chapter.

But a real irony about traditional Lean is the whole black belt and sensei deal. Because Lean is really designed to be grass roots rather than expertise and certainly, at first there needs to be some guidance or some facilitation but the notion of some kind of master coming in really misses the power of the original quality

circles and all the Deming stuff that made it so powerful.

Joe: I think the real true Lean people that I'm familiar with

believe that there is that hierarchy that has developed in six-sigma.

Robert: There's one more thing that happens. We've seen it

with the quality movement as well is that originally it was designed to be mindful. You know people sitting

around thinking. Then the forms really are designed to be mindless so you don't have to think, you fill out the form. It really takes away from the actual creativity that we need around the room.

I'll tell you, it's very impressive of how creative people are when given the opportunity to think about how to better a system.

Joe: I think you bring a point when you're talking about the

service guys. Everybody is always worried about failing and major changes. But when you do everything at the place of work and at Gemba as we call it in Lean, changes are all minor. There's not a drastic change that when you do fail that the whole company structure drops down.





Robert: No, you're not betting the farm, but on the other hand, let me give you some real life examples that this service group had to think about: When to have cars come in? How to talk to people about when to pick them up? How to designate who/what mechanic should be working on what difficulty of job? You know there's a lot of scheduling stuff.

There are a lot of systems that needed to be in place to communicate with the customers. Then there's the relationship between the people taking the phone calls in the reception area to the technicians. As I'm mentioning some of these elements, you can see that it was not anything too elaborate. By the way, that includes bringing making sure the parts were there when the technicians needed them. We were creating a relationship between the parts

department and the service department and these networks of relationships. They were just able to little by little by little design systems that accommodated the outcomes. Which, by the way, the outcomes included fixing the vehicle first time and having it really be right, having loaners available for the customers, having parts available for the technicians, and so on.

Joe: I think you bring something up there that I want to

touch upon is that I see where people want to, they

want these customer experiences and start collaborating with customers and we talk about co-creation and open innovation, but unless that structure is already happening with a collaborative type of system within a company versus a normal command and control situation, unless that's happening internally is it possible to do externally?





Are you going to fail? Is that failure just sitting waiting to happen?

Robert: The answer is no. It's not that it's impossible. It's

impossible to do it that way. It's also impossible to do it as grass roots from the standpoint of, management has to support it. It is one of the aspects of my latest

version of “Path for Managers” that I emphasize because I saw it in abundance over the 12 years that I had written the first version to the second version was a lot of times it was the failure of leadership to support the kind of change efforts.

Without their support, it wasn't going to go anywhere no matter how many people within the company wanted it. You can't drive it through grass roots and so there's a function of leadership, and so we always have

to drive it up to the senior-most leader to make sure they're, in fact, not only supporting it, but insisting upon it.

Joe: If I want to have a collaborative structure externally, I

need to have one internally first. It is the best way to do it.

Robert: Yes, let me give you an even better, almost immediate,

almost visceral example. When the CEO and the

Executive team are not aligned, how do you expect anybody else in the organization to be aligned? Everybody take a real quick survey of the companies you know and love and notice how often, in fact, the senior team is not aligned.

You've got the Vice President of this going in that





direction disagreeing with the Vice President of that and they have what Deming called their own little fiefdoms. Below them, everybody is supposed to self-organize into utopia.

Joe: When you talk about your workshop and a structured

approach to Lean, it's a three-day workshop, it's pretty intense I would imagine for three days. What does

someone learn and what types of people come to it? Robert: Well, first of all, that workshop there was a prerequisite

what you had to be, have done our four-day Fundamentals of Structural Thinking. So, all the folks that came had done that course, so they were familiar with structural thinking. Because that was important, they needed that to be able to really go at the pace that we went.

Just generally what we did was we compared traditional Lean to the structural approach with a new Lean. We experimented with both and saw which one was superior and people got their arms around it and every person went out ready to put it into place. Either some of them were consultants and said they were ready to put it into place in their client's businesses and organizations and some of them were practitioners; they were from companies, and they

were ready to put it into place in their companies. Joe: Did they also have Lean experience or did a lot of them

not have general Lean experience? Robert: I had everything from people who never did anything to

black belts. By the way, all of them had all the people





that had experience with Lean also had the typical frustration that people do.

Joe: Does the new Lean follow Deming? I mean is it an

extension of that or do you take a different direction than Deming?

Robert: I don't know that. It doesn't follow Deming; it is

influenced heavily by Deming and Deming's notion. By the way, I think Deming was probably the senior-most wonderful innovator in this area and I'd like to point out that he was a composer. Well, he was and Drucker was a musician. There is something about coming from music where you really understand in an extracurricular way how things are put together.

So it does, and I'm not just sort of saying this because I'm a composer, but that what one learns as a

composer actually has an impact on how you look at organizations because in some ways they're very similar in terms of elements in relation to each other and how they work together. It relates to the statistical approach that Deming has for manufacturing in terms of minimizing variances and building in quality. So, you don't inspect it at the end. It's actually really built in. I think is quite extraordinary insight and I'm totally in love with it. When people try

to take quality and then put it to other realms of organizations where they were not looking at reproduced processes, like real management where you have to make decisions based on unexpected things and you can't minimize variance when you're, when you've got something new that's thrown at you that you've got to make a command decision about.





On the other hand, Deming really understood this principle of outcomes. Because he said that "Look you could really create the perfect buggy whip and it would be obsolete." So it wasn't simply minimizing the variances, it was also understanding the strategic outcomes that companies were after. And also the other thing is the kind of wisdom; Deming really

understood the wisdom that the rank and file have and how we are not making great use of that wisdom, which we should be learning from each other all over the place.

In the collaborative structures that we're talking about

now because of the ease of communication and everything, I think goes right along with what Deming always thought about just in a different time frame.

But remember he's a real innovator. He wasn't just taking somebody else's system and following it. He was rethinking systems and so he was so in touch with what it meant and why it worked, how it worked. . .

Joe: I have to ask you, how did a composer ever get

involved in Lean and structural analysis? Robert: To make the long story short. I was teaching

composition at the New England Conservatory and I

created this particular approach to teach that and I wondered if I could use that approach for non-compositional aspects of life-like people creating things. I created a course around Boston and I had teachers teaching this course and so on and some of the folks at MIT Sloan School of Management took the course.





The next thing I know I got invited to join a company, to form a company with Peter Senge, Charlie Keefer, and myself called Innovation Associates. And then that's when I really learned about system dynamics and the great work that's going on a Sloan School of Management and got very interested.

The system dynamics and structural dynamics are very similar. But they’re like cousins. They're not identical and one is more from a compositional process and one is from a systemic process which originally was maybe from electronics. There was just great co-collaboration there. At first, I was only interested in organizations from the standpoint of it's a place that people create and so I wanted to help them be more effective but then I

started to understand the organization itself as a structure and started to see that success did not always succeed and understood, came to understand, what was causing that.

Joe: Is there something you would like to add that maybe I

didn't ask? Robert: One is the whole notion of customer value and trying to

drive everything through customer value. I really think

that's ridiculous. There are some things that certainly, where customer value would be the organizing principle but there are other things, which are not, like infrastructure stuff or things that are under the hood that have no impact at all on the customer.

I mean you can always argue that they can, but you





have to get so indirect and convoluted that it becomes not practical because you're no longer in touch with the real motivation. So there are other reasons to perfect systems other than customer value. If you start to divide the word world into customer value or waste, you miss so much. I think that's another limitation. I do have respect for

traditional Lean; I just think that it's really in many ways obsolete and is based on some wrong premises, but I certainly love its intention and it often can be tremendously successful.

Joe: If someone is interested in finding out more, how can

they contact you? Robert: Two places to go. One is our website, which is

www.robertfritz.com and the other is an online course

that we do with a partner company, and that is a great thing, by the way, it's a personal on-line course, lessons every day, me on video; it goes for over three months, very powerful, and that's www.wisepond that's W-I-S-E-P-O-N-D dot com.

Of course, all of my books are on Amazon and all of them except for one are in Kindle. Also, if you come to our website, you'll see other things that we offer CDs and so on. So I also write a blog every week on the

Wisepond site and we have a pretty active Facebook page which is Robert Fritz Inc.

Joe: I would like to thank you very much Robert. This

podcast will be available on the Business901 blogsite and the Business901 iTunes store.





Joseph T. Dager

Business901

Phone: 260-918-0438

Skype: Biz901

Fax: 260-818-2022

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Website: http://www.business901.com

Twitter: @business901

Joe Dager is president of Business901, a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He takes his process thinking of over thirty years in marketing within a wide variety of industries and applies

it through Lean Marketing and Lean Service Design.

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A New approach to Lean

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Transcript of A New approach to Lean