Agenda

10% or Die 

The Powerful Deep Lean Strategy of Top Global Competitors

An Interactive Simulation with Case Studies

Facilitated by James B. Swartz

In This Workshop, You Will…

• Learn how top competitors improve their value offering to cost ratio by 10% per year. Learn strategies you can apply in your organization to do the same.

• Learn the Deep Lean Laws and Best Lean Practices and why they are fundamental to success.

• Understand how you can use these Laws and Practices as top competitors do to achieve 10% per year in improved value-offering-to-cost ratio.

• Study cases where the Deep Lean Laws and Practices were applied to achieve major improvements and breakthroughs.

• Be presented with numerous real-life business situations in which you will interactively create major improvements or breakthroughs.

• Experience a hands-on simulation plus many practical exercises to prepare you to apply these Best Practices using the Innovative Leadership Actions.

• Learn how Deep Lean Laws and Innovative Leadership are used to create breakthroughs and disruptive innovations.

• Learn how to take your company to the next level.

For the last ten years, top global companies, including Toyota have increased the ratio of their value offering to costs each year by 7 - 10%. An organization that wants to survive and thrive in this brutal global marketplace must achieve 10%.

This interactive simulation with case studies demonstrates how top world competitors use the first three levels of a 4-level Deep Lean strategy to achieve 10%. To understand why three levels are necessary, observe in the figure below the distribution of cost improvement projects from a typical 10% per year leader. (Increases in Value offerings are distributed in the same way.

• Sixty-four small projects contributed 1/3 of the $4.7 million savings. These projects eliminated waste, reduced setup costs, and improved tooling.

• Fourteen major projects contributed 1/3 of the cost savings.  Larger changes in the process and product were made to achieve faster customer delivery, improve quality, increase customer satisfaction and reduce cost. Suppliers and customers were involved in 50% of these projects.

• Five breakthrough projects contributing 1/3 of the cost savings came from one major product simplification and the redesign of four business processes.

In another case, 5% of the total departments at a large hospital contributed over 37% of the improvements.

Cost reductions and innovations roughly follow a 35/5 rule instead of an 80/20 rule. That is, 35% of the contributions come from 5% of the projects or contributors.

Overall, to achieve 10%, your strategy must produce improvements on at least the first three levels: small, major, and breakthrough.

The 4-Level Strategy

Level 1. Small projects which each contribute 2% to 10% in selected operations and processes.  In total they contribute an average 3% to the company’s 10% overall improvement goal.

By enlisting everyone, small projects prepare people to willingly support larger projects. 

If you have $100 million in sales, smalls must increase your value offering to cost ratio by $3 million per year. At this sales level you should strive for 75 to 100 successful smalls per year, which means a very high level of commitment at all levels.

Rough rule of thumb: One successful small project per every 10 persons is needed to achieve 3%.

A few Small examples and case histories are presented.

Level 2. Major projects which each contribute 10% to 50% in selected services and products.  In total they contribute an average 4%, which when added to the small projects, contributes an average of 7% to the company’s 10% overall improvement goal. Major projects result from first finding large opportunities to increase value offering and reduce cost. These opportunities are then seized using the Innovative Leadership Actions presented in this simulation.

Major examples and case histories that are presented:

• Improvement of a value delivery system to reduce lead time by 50%, reduce cost by 30%, and improve quality by 50%.

• Major design improvement of a product or service to substantially increase its value (performance, reliability, utility, esthetics, appeal, etc) to the customer, or reduce its cost by 30%.

• Finding a new market for a variant of a product you already have developed.

With $100 million in sales, majors must increase your value offering to cost $3 million per year. At this sales level you should strive for 15 successful Majors per year. Rough rule of thumb: It takes one major for every 70 people to achieve 3-4%.

Level 3. Breakthrough product or service innovations, marketplace innovations, or a substantial redesign of your business systems. They are considered breakthroughs if they each produce over 50% improvement in selected systems, products or services and markets. On average these should provide an organization-wide total of 3% - 4% improvement. When added to the Smalls and Majors, they bring an organization to the  10% improvement level. Remembering our previous distribution from a 10% company, out of 74 projects for the year, 5 breakthrough projects contributed 1/3 of the total cost. The distribution we had for the cost reduction also holds true for projects that increase value offering.  In other words, a very small number of breakthrough projects can contribute 1/3 of the company’s overall increase in value offering to cost.

Breakthrough examples and case histories that are presented:

• Total redesign of a major value delivery system to reduce delivery time by 95%, reduce cost by 50%, and improve quality by 90%.

• Development and marketing of a new product or service that leapfrogs the competition in value offering and establishes you as the innovative leader (Sony’s Walkman, Apple’s iPod, eBay). 

• Fulfilling additional customer needs over and above the product or service that you currently offer (Home Depot’s Pro Initiative for contractors, Apple selling millions of songs per day for the iPod to become the leading online music retailer, GE providing all airplane maintenance to Southwest Airlines).

If you have $100 million in sales, breakthroughs must increase your value offering to cost by $3-4 million per year.

Rough rule of thumb: It takes one breakthrough for every 200 people or every $20 million to achieve an average 4% overall contribution.

Our simulation and case histories are focused on major projects and breakthrough projects: The combination of these two must produce the additional 6-8% per year above the 3% that small projects contribute.

Level 4. In uncommon cases, innovative competitors develop disruptive business models, products, and services that have the potential to temporarily or permanently destroy competitors that can’t follow rapidly.

The Deep Lean Laws

1.      Core-Value-Added Laws (fundamental to Lean Thinking).

2.      The High-Leverage Laws (maximizes yield from scarce resources)

3.      Output Limit Law (enables all the other Laws).

4.      Process Time Law (used by top system designers for a millennium).

5.      Agility Laws (critical in modern times).

6.      System Learning Laws (built into all 10% systems).

You reach the 10% zone when all of these laws and best practices are expertly applied. A working knowledge of the relationship between laws and Lean best practices will be developed in the simulation.

Deep Lean is a state in which the highest customer value offering to cost ratio is achieved along with the highest return on resources. This state is only possible with the successful application of Deep Lean Laws and Best Practices.

Innovative Leadership Strategies

Highly successful innovative leaders use four actions to find high leverage opportunities, four actions to mobilize others, two actions to seize the opportunities and two actions to sustain a culture of high improvement.

Find High-Leverage Opportunities Mobilize Others to Willingly Seize the Opportunities Seize the Opportunities Rapidly and with Low-risk Sustain 10% Improvement in Value Offering/Cost

About James B. Swartz

Jim is recognized as a pioneer in the Lean movement. His Lean journey began in 1976 when he became manager of a $200 million manufacturing plant. Faced with intense competition, he and his management team made many pilgrimages to Toyota, Toyota’s suppliers, and Matshusita. They successfully adopted JIT, Jidoka, and Waste Reduction in their plant from 1979 to 1982.

In the past twenty-five years, he has led or facilitated over 500 successful transformations of product development, service, manufacturing, engineering and business systems in over 50 corporations worldwide. Because of the brutal global competition, he encourages organizations to set a goal of 10% per year increase in their value-to-cost offering. In recent years he has found that organizations that don’t achieve 10% are not taking advantage of all the powerful Six Laws that govern operations.

He shows how using these Six Laws plus Lean Best Practices, you can implement the same four-level improvement strategy of the leaders. He guides leaders to change focus from solving low-leverage presented problems to finding and seizing high-leverage Lean opportunities (opportunities of high present value and high ROI). He helps leaders learn how the great ones mobilized people to willingly invest their time, energy, and resources to find opportunities and rapidly and safely seize them.

He has conducted hundreds of hands-on/interactive workshops on TPS, Lean Manufacturing, Fast Time to Market, Overcoming Obstacles to Lean, The Lean Office, The Lean Enterprise, and High Leverage Leadership. His 1994 bestselling book The Hunters and the Hunted showed how American manufacturing companies were fighting for survival using Lean thinking. He is the author of Seeing David in the Stone, a book on Innovative Leadership. His latest book, 10% or Die will be published in late 2008.

Jim has a Masters in Physics from the University of Illinois as a Bardeen Fellow.

Duration:
Full day: 8:00 a.m. - 5:00 p.m.

Fee:
$645