A Cohesive Visual Communication System Drives Ownership and Therefore Results

There are many organizations who claim they have a magnificent and effective visual management system. If you take a Gemba walk with the managers of these organizations they are proud to point to many displays of metrics on striking but extremely busy electronic screens. I haven’t quite figured out where they get this delighted feeling from, the only source I can think of is that the display of information is some sort of technical accomplishment to efficiently display outputs. The truth is it took many hours of non-value added time from process and IT engineers, and of course the invested time does not stop there as the system now needs to be maintained. I do agree this automated version of Visual communication is better than having to individually access the same information from a personal computer. Not much of an improvement though, considering the cost and the effect on achieving results.

There are also organizations that use visual communication for command and control, disguising it as a method to discover more productive task standards. Harvard Business School Assistant Professor Ethan S. Bernstein summarized a study completed in Southern China where a large organization, with many employees on the shop floor, was being closely observed by management. His conclusion was achieving full observability of everything might not be productive. What he is missing is that these employees were not engaged. It was definitely an “us and them” culture where their only reason for being there was to meet production quotas.

Through the Visual communication system managers should be able to determine nonstandard conditions, uncover root causes, demonstrate progress towards the overall strategy, and sustain the momentum of their problem solving efforts, in real time. Fundamentally this is the power of Visual Management enabling corrective action, continuous improvement, and sustainment of results. The system must not be isolated to the display of output trends where the data is actually too old to act on with preventative methods, nice to know but not actionable.

To be effective and fast paced Visual communication design must have three basic levels, Business Results, Operational Objectives, and Operational Activities. It is critical that all of these levels are interconnected; each level is an input for the next. If one level is not influencing the next it will result in more improvement resources and time to accomplish the overall strategy. The levels also reflect who is responsible and empowered to have a direct effect on the next level.

Visual communication starts with the leadership team determining which strategic metrics will be used at these various levels. This planning stage is part of designing the organizations execution of the strategy. The first level is the Business Results level because it drives the other two levels. Business Results are the output metrics of what determines success for the organization. Examples are Revenue growth, Gross Profit, EBIT, Product Volume, Cash Flow, Cost, and Customer Satisfaction. They are usually updated monthly or quarterly and are usually automatically generated from an ERP system. It has been the mistake of many lean transformations to not connect the value stream improvement efforts to business results. If you cannot think of how the continuous improvement investments will impact these Business Result metrics then you working on the wrong things and wasting valuable improvement resources.

The mid-level of Visual Management is called Operational Objectives. These are output metrics of the value stream itself. Examples are Lead Time, Yield Loss, Cost per Unit, and Productivity. These mid-level metrics are owned mainly by Departmental Managers, not the value stream workers themselves. Some organizations do impose these metrics on the value stream workers but this is a mistake as value stream workers are not empowered to this level. W. Edwards Deming once said that uncovering special causes was the responsibility of the local work force, the value stream workers. Common causes were part of the system. The system is the responsibility of management. These are system type metrics. This level of metrics is usually updated on a daily basis. The display type can be both automatically and manually generated. An example of how this level influences the next level of Business Results is in the category of cost, if yield loss is improved the Cost of Goods Sold (COGS) will improve because less product material has to be planned. So if the trend of yield loss is going down there should also be a downward trend relationship with COGS. It is of tremendous value for the managers, during their Gemba walks, to communicate this trend connection with the value stream workers.

The final level of Visual Management is called Operational Activities. These are all input metrics the value stream workers own, are responsible for, and have most of the control. The measures are all manually displayed at their operation and updated frequently (usually every hour but they can be more often). Examples are number of defective product, levels of WIP, units produced, autonomous maintenance time, and number of breakdowns, machine speed, down time during shift change, training hours, standard work observations, and 5S Scores. They are all within the value stream workers control and empowerment to make decisions on what will impact their outcome. Depending on what the organization has for a strategy the Operational Activities level for Visual Management will first influence the mid-level and finally the Business Level Visual Management metrics. If we take our previous example of improving the Business Result of cost, the value stream workers would have the ownership and responsibility of improving the number of defective products. With their problem solving effort of reducing this measure, the next level yield loss would be directly impacted and finally the Business Level metric of cost would be impacted. Once again it will be of incredible value if the managers are communicating this connection of how the efforts of the value stream workers are impacting the Business Level metrics and therefore the success of the organization.

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