Jerry Bussell – Lean ROI Comes Down to How It Helps You Grow Revenue Faster

Jerry Bussell recently retired as Vice President of Operational Excellence for Medtronic Surgical Technologies. He is currently President of Bussell Lean Associates, a lean advisory service for CEOs and their executive teams. Jerry is also Executive Adviser to Underwriters Laboratories’ Center of Continuous Improvement and Innovation.

First, leaders have to look at the overall mission of what the company is trying to do by starting with policy deployment. Lean is an enabling strategy that allows a company to execute all of its other strategies. What are you trying to do in the areas of business growth, customer service, new product introduction, financial performance, and development of people? You need to look at the strategic initiatives for every one of those categories, to look at the gap and determine where you want to get to in the current year and three years out.

Lean helps close the gap by improving key areas by putting systems and processes in place. You’re not looking at it project by project. You look at the overall picture, using policy deployment to take a balanced approach to close the gaps. It helps determine what you really need to go after if you’re going to make the targeted margin improvement or cost reductions. Do the proposed projects close the gap? Yes? Fine, those are the ones that you work on. You don’t work on 50 different projects. You pick the big ones.

You should select projects and look at ROI in terms of how you grow revenue faster. Quality, for example, if you don’t have good quality, you won’t grow as fast. Or people, if your people aren’t ready, you won’t grow the business as fast either.
It’s not all dollars and cents on a cost-of-goods line. If you put all of your efforts into cost-of-goods savings, you might hit those numbers, but you’re not addressing customer service, quality, people development or new product development. Putting the right processes in place in those areas is what enables a higher return.

Everybody is focused on the results instead of the process. Focus on the process and you will get the right outcome.

It’s really about quality. Everything else is just outcomes. Cost and delivery are outcomes of building quality into the product.

Quality people have a hard time connecting lean with quality. Lean is all about quality. It’s all about following procedures. That requires standard work. You can’t improve anything until you do standard work. You can’t make any improvements without standard work because you have variation all over the place.

You have to get leaders away from the thought that lean is a “cost savings” initiative. In most corporations that take that approach lean loses steam after a while. You really need to focus on the customer, giving the customer what they want, and putting brilliant products and systems in place to do it. If you do that you will have a competitive advantage.

It starts and ends with the leaders. Once you explain the philosophy, CEOs have to look at themselves first. One CEO who I’ve been talking to said, ‘I’ve got huge problems based on what you’re telling me. I’m going to have to shed some of my senior leaders. These guys aren’t going to change.’ You have to give them a chance, but if they’re not willing to change, you have to let them go because they model the behavior that people under them will follow.

You want to move away from a push structure where you’re pushing all of these projects down. Policy deployment asks managers to figure it out: ‘Here’s the target. Come back with the projects that will allow us to get there.’ The direction comes from the top in terms of what has to happen. The organization has to come up with the how, feeding it back up to senior management.

So many people look at this myopically. They’re not looking at where things are going. You really need to change before you have to change. The problem is that you have a lot of people who have been very successful, and been promoted, and they’re not servant leaders.

If you’re not doing servant leadership, if you don’t put other people first, you won’t even be moderately successful. You have to change the type of people who you put into leadership positions. The HR system is absolutely critical; the development plans and progression, all of that has to be around people having the skill sets for this type of leadership.