Using Value Stream Mapping

Value Stream Mapping
Guest was Drew Locher Managing
Director for Change Management Associates.

Business901 Podcast
Transcript

Drew was my guest on the Business901 Podcast. Our talked
centered around how Drew uses the Lean tool of Value Stream
Mapping. I think you may be surprised by a few of his answers.

Drew is currently Managing Director for Change Management
Associates. CMA provides Lean Enterprise Consulting and
Organizational Development services to industrial and service
organizations representing a wide variety of industries including:
Healthcare, Transportation, Distribution, Education, Financial
Services and Manufacturing. Drew first became involved in the
development and delivery of innovative Business Improvement
programs while working for General Electric in the 1980s. In 1990,
Drew left GE to form CMA. Since then, he has utilized his diverse
experience to help develop creative solutions for the companies
with whom CMA works, in order to improve their business
performance.

In 2004, Drew co-authored a book titled, “The Complete Lean
Enterprise: Value Stream Mapping for Administrative and Office
Processes ”. The book won a 2005 Shingo Prize for Manufacturing
Excellence in Manufacturing Research. In 2008
he published a book titled, “Value Stream
Mapping for Lean Development: A How-To
Guide for Streamlining Time to Market ”. This
book demonstrates the application of Lean
Thinking to the third primary value stream,
“problem solving”.

Value Stream
Mapping Business901 Product Marketing Lean Marketing

Joe Dager: Thanks everyone for joining me. This is Joe Dager; the host of the
Business901 podcast. Participating in the program today is Drew Locher, the managing
director for Change Management Associates. Drew also co-authored a book titled "The
Complete Lean Enterprise - Value Stream Mapping for Administrative and Office
Processes" which won the Shingo Prize. Drew, what does Change Management Associates
do?

Drew Locher: Well, Joe, we've been in existence since 1990, so actually next year, 2010
we'll be celebrating our 20th year in business. Basically, we've been providing
organizational development and operational excellence services to a wide variety of
companies representing a broad spectrum of industries, those in manufacturing and
services. More specifically, we provide educational and training services to organizations
to try and develop internal resources basically in the subject areas of world class or what
today people are calling lean thinking, lean enterprise.

Joe: You say world class or lean thinking. Can you kind of expand on that a little bit?

Drew: The underlying concepts date back as many as 90 years but in its modern form,
lean thinking became the operative terminology starting in 1996 with the publication of
"Lean Thinking" from Jim Womack and Dan Jones. Basically at that time, it was
summarizing what many of us were already doing at that time in terms of business
improvement. But basically, the terminology really has taken root where the book has
been out for 14 years and it's just now getting traction. I'm pleased to think that finally
now we're getting the message right about business improving in general and viable,
successful business models that companies should be practicing in any industry.

Joe: Can you explain what value stream mapping is?

Drew: You could call Value Stream Mapping, the assessment and planning tool of lean

Value Stream

practitioners. It allows any individual or any organization to take a look at business
systems, even complex systems such as product development and understanding how the
current state currently flows or not; where the wastes are, where the issues are that are
keeping the organization back from reaching higher levels of performance. To me, that's
an important tool to have and a great value and benefit to a company. But even more so,
if the tool is used properly, it actually can provide organizations the meanings to redesign
those systems based on lean principals of value flow, pull, leveling and perfection, as well
as develop an implementation plan to get there. So if the tool is used properly, it's not
just an assessment tool, it's an enabling tool.

It allows folks to be able to apply lean thinking to any business process and any overall
business, as we also do enterprise wide maps, and be able to redesign them based on the
principles of lean. So the way we view it, it's a very powerful and enabling tool for
organizations.

Joe: So you introduce to Value Stream Mapping to a customer very early in your
engagement with them?

Drew: Absolutely, it’s our assessment tool. So when we do an enterprise map, we're
assessing the current operations of that enterprise and that gives us a good idea of kind
of where they're at and where they need to go. And of course, we develop these maps
with an internal team, typically management, and when we're doing an enterprise map
because they've got to be part of this process, this change process. So absolutely, it's
done very early in our transformation methodology.

Joe: Is there a time you should not be using it?

Drew: Yes, it's like any tool, there's a place for it and a time for it and there's
applications you shouldn't be looking at. Mainly it is not to assess a specific problem

Value Stream

unless it strongly relates to a process. Nor should it be used to look at information flows
or any processed flow that solely resides within a department or within even a cubicle.
The third area I would say that is not helpful is if a company has strategic issues. It's not
a strategic tool. It's not going to tell a company they're in the wrong business, though it
might shine some light on that if performance is very poor. So it shouldn't be used to
determine if we are in the right business or the wrong business.

For example, I was doing an enterprise map at a company years ago and almost the first
or second process box that we started discussing was developing quotes and proposals for
potential new business. Their hit rate, their conversion rate of proposals to orders was
one percent, which is just horrible. I started asking questions about what was their
strategy, who their customers really are, and what markets they hoped to serve and what
ensued with a near riot amongst the management of that company.

What came out of it was strong, strong disagreements on strategy. And I basically called
time out and said, "OK. We're not going to map this. We're going to come back and talk
strategy on another visit.“ So those are probably the three most common misuses of the
mapping tool itself.

Joe: When you discover problems in the middle of the mapping and it becomes apparent
that there's an issue there, do you take a time out and look at other tools to use?

Drew: Absolutely. We very well could. Not usually during the mapping event itself, but
thereafter, we might bring to bear some of the basic quality managing tools. You know,
we see some problems that are triggered by data on the map, we might revert back to
classic cause and effect diagrams to understand what the potential root causes of that
problem is. Not typically during the mapping event because we're usually pretty pressed
on time to complete the current state and the future state and the implementation plan in
what's usually like a three day event. But the map would identify the need to apply other

Value Stream

tools like the basic quality management tools or even the more advanced quality
management tools, the statistical based tools. The mapping process itself could identify
the need for those.

Joe: Typically you spend a lot of time at the beginning to get it right. Then the next
cycle gets shorten. Then the last cycle, you've just got X amount of time for it. You end
up rushing through it? Does that happen a lot when you're doing current state, future
state and implementation plans?

Drew: Yeah, there's some. In the beginning, what I see the people that are using the
tool and I've done countless numbers of training the trainers where we teach internal
folks -- how to do this at a facilitated mapping event. Probably the most frequent trap
they fall into is too much detail on the map, so they tend to spend an inordinate amount
of time on current state mapping. So, it's one of the most frequently asked questions
that we receive is, "How much detail is too much and how much is not enough?"

We have a response for that and it’s basically understood what the use of the tool is. It's
trying to identify impediments to flow and waste. Now, you have to ask yourself do you
want to identify every stoppage of flow and do you want to highlight every waste. Or do
you just want to highlight the significant ones? Most people would say, "Well, we want to
highlight the significant ones."

Well, what makes it significant? Well, if it's a stoppage of flow of say minutes and we're
looking in the context of an overall lead time of weeks, we probably really don't care
about the minutes. We may care about the hours or the days, not the minutes. So I'd
map things where the overall lead time was anywhere from five hours to 15 years, so the
granularity or the level of the detail you get into has to be adjusted accordingly.

Value Stream

So we always tell people if you're getting into too much detail, ask yourself a question.
Am I gaining any additional knowledge by this detail? Am I highlighting any waste
between process steps that I wouldn't see if I combined process steps? And is it one box
that depicts multiple steps. Usually the answer is no, you're not going to lose anything
like that, and that allows companies or practitioners to be able to find the right level of
details so they don't get hung up on too much detail.

The second pitfall they fall into, as you know, Joe, from value stream mapping yourself,
it's a lot of data on the map and a lot of times there's this tendency to want to put a lot
of precision in those numbers. But we always try to respond to that by telling people
you're up to 20,000 foot view with most value stream maps and therefore you don't need
precision in the data. You need accuracy, but not precision.

If we can't observe the processing and gather the information firsthand, or maybe we put
in some means of collecting the data in the weeks leading up to the mapping event, we'll
actually defer to people's best judgments and estimates, and usually that's close enough.

I can probably count on one hand in the 19 years that that didn't work, whereas I've
seen so many people just really try to get precision in the numbers. At the 20,000 foot
view, it's just not necessary. You're still going to see what you need to see.
Those are probably the two biggest pitfalls I see people falling into.

Joe: Well, and I think that people don't have the numbers to begin with when they're
first starting out in lean either.

Drew: Right. They get very frustrated particularly when mapping development
processes or office processes where there's not a lot of metrics readily available. In
manufacturing, there are a lot of measurements there, so we can make use of those for

Value Stream

the maps to create the maps. But in the office and development processes, sadly there's
very few metrics. And also we're creating them for the first time when we do the first
current state map.

Joe: That brings me to your book on lean development and then your new book that's
going to be published next year -- "Extending Lean to Office and Services" if that is true,
there aren't a lot of metrics. What is the value -- just the picture?

Drew: We will create the metrics for the first time as part of the current state
development. It allows people to start looking at things a little more objectively and being
able to step back and see what's happening. So even though they might be estimates or
collection of data for a short period of time, they're still very telling. And that really opens
up peoples' eyes when they start looking at overall lead times and they look at overall
quality metrics - what we call first pass yield or whatever people call first time quality or
first time through or roll through quick yield. People have different terminology for these
measures. But usually when they look at those things for the first time, even if they're
estimates, they're very, very eye opening for people.

And that hopefully, motivates them to want to put some metrics into their future state,
because they have to create a future state for the business process or the overall
enterprises as well.

Joe: I see that a lot, the first time I started asking questions from a marketing
perspective to build a value stream map, I just ask: How many customers do you need a
month? How many customers do you want to have?" And then we walk them through the
funnel and we run the numbers back to get the percentage of conversions that is needed.
I just have them guess, on what that number is and what that percentage is sometimes.
But if you would sell everything on your website - if all your sales came from your website

Value Stream

and you had 20,000 visitors and you had 1,000 new customers, then you kind of walk
them through the process and see where you're losing them and where you're gaining
them. It's real eye opening to them.

Drew: It is very eye opening. We want part of lean thinking to be data oriented. Just
don't overdo it; that's bad. It's that happy middle ground where we've got to find
because you can also go the other extreme. Too much data where you have paralysis by
analysis, so it's just finding that happy medium somewhere.

Joe: People that have never tried to map a process before, similar to when I introduce it
to marketing people. It is kind of shocking to them, but I relate it to a marketing funnel
and marketing calendar, like having those stages together.

Drew: It is difficult for several reasons. One there's no well defined process to begin
with. Two, as we just were discussing, there are no readily available metrics which we
want to apply to the value stream maps. So, for those two reasons, it's difficult but it's
not impossible. What marketing folks, like any folks that liken themselves as creative,
they're in creative processes like development, there's no difference, what they have to
realize is that what they are doing is a process.

And I'll give you a great example of this. A relative of mine works with, does all the
marketing for a brewery, a beer company, a beverage company. I'll leave them nameless.
And he read my first book and he says, "I just don't see how this applies to marketing."
He handles all of it: print ads, radio, TV spots, all of it. And I said, "Well, let me come
out, we'll facilitate a mapping event, and you'll see." To make a very long story short,
what became very apparent to them was 85% of it was process.
So think about it. I want to sell more beer to people, right? First thing I have to figure
out is who has a propensity to drink more beer. What tells me that, market research,

Value Stream

which is a process? It's a process of identifying information I need, and how I'm going to
get it, and what I'm going to do with it. So the market research tells me males 18 to 46
drink a lot of beer, and we want to sell them more beer. Maybe steal some market share.
So the next question is, well, what resonates with those people? Do they listen to radios?
Are they reading magazines, and if so what types? What tells us that? Market research
again, which is a process. Tells what information I need, where am I going to get it, and
what am I going to do with it.

Next is, all right so the research says they listen to drive time radio. They read various
magazines. So now we start getting into the actual creative spot part of that process.
What's that radio spot going to sound like, what's the theme going to be, that kind of
thing. Well, when you really look at it, overall lead time and overall work content or
process time that was only about 15% was the actual design of the radio spot, actual
production of that spot.

The rest of it was all process. And even a large chunk of the radio spot was process
too -- scheduling hours in the studio, that kind of stuff. So what became very apparent to
this relative of mine and his team was that it really is about process. And, in the
beginning, I could see it in their eyes. They weren't real pleased with that, because they
liken themselves to these very creative people. That's their business. What they're selling
is creativity. And to recognize that a large, large majority of what they do is process was
not easy for them to initially swallow. Once they did, they were off and running. We were
able to create a future state that cut the lead time to bring a new radio spot out to the
market by 50%, which is a tremendous benefit to them. Because, let's say a radio spot is
put out and it's not working. They can get a new spot out in half the time now.

Value Stream

So that's just one example of the benefit to them. But it all took them really looking in a
mirror, which a current state map really represents, is looking in a mirror and not liking
what they see. In other words, seeing that there is a way of doing this better, and
recognizing, first and foremost, it is about process. Then, and only then, were they really
properly motivated to create the future state map, which they were.

Joe: Is that similar to the explanation you would use for lean development?

Drew: It's the same kind of behavioral resistance that we encounter, development is a
creative process. Again, it's a process. And the creativity part of it is a really very small
part of it. Most product development involves information, again. What information I
need, where do I get it, and what do I do with it? Most development processes are really
about knowledge reuse. They're just making changes to existing technologies, existing
design. A very small percentage is pure green field, you know, something brand new
that's never been developed.

Joe: Right. I've seen that a lot, everybody always thinks, thinking out of the box and all
the different things. When it comes down to it what really works and what's really used, is
something that was really in the box.

Drew: Exactly. It already existed. Some preexisting technology, This is why General
Motors Corporation has a thousand ways of locking a car door, across all models. And
Toyota has eight. It's either six or eight.

Joe: And we just want it to lock, the people that own it.

Drew: Right.

Value Stream

Joe: You talk about in your value stream mapping about identifying loops as an
important part of it. Could you briefly explain loops?

Drew: Well there's no science behind loops. We don't always do it; it depends on the
complexity of the future state. But basically what happens is when we design the future
state, the room gets quiet because people start looking at this picture and start saying,
"Wow, how are we going to make this happen?" because it represents significant system
wide changes usually. If we're doing this properly it should. So, we have learned to
chunk down the future state into what some people call loops, which allows for them
prioritize those and then prioritize the highs and opportunities within those.
So we can start laying out a more reasonable realistic plan that people can have a better
sense of, yes, they can accomplish this. And that's really all loops are about in terms of
chunking down a future state into pieces that people can get their heads and their hands
around in terms of implementing it.

Joe: And so you do the future state and get it done. Then you break it in loops and kind
of break it off into chunks to be able to accomplish it.

Drew: Right, and then allow the company to just prioritize it and decide which area is
going to have to come first. And which are is going to have to wait. And that helps them
kind of lay out a realistic plan, because if they put together a plan that's not realistic,
they won't see the future state through successful implementation and we just wasted
everyone's time. Which happens, people do not implement the future state.

Joe: Now, there's been a lot of argument that I've seen lately coming from different
people and saying that lean is about the tools. There's another section that says get rid
of tools, it's about culture and that's what lean is about. Can you kind of give me a little
take on that? A view...

Value Stream

Drew: It is about culture. It's always been about culture. Back in the TQM days where I
kind of started in the 80s, it was very clearly about culture, trying to develop a culture for
continuous improvement. Trying to get people coming to work every day thinking about
ways to do things better than yesterday or last week or last month. That's really what it
was all about. Has always been that way. The tools are a means to that end. The tools
allow people to practice continuous improvement and be successful. The value stream
mapping is a tool. Now we see it as a very powerful too.

Not just to allow people to redesign system, but we see it as a tool to teach, to teach the
principles, the key principles of lean to value flow, pull, leveling, and perfection. But it is a
tool. It's an enabling tool but it is a tool. So it has its use and has its, as we discussed
earlier, has times when you shouldn't be using it.

But doing the value stream mapping does not make you a lean enterprise. Just like
applying 5S does not necessarily make you a lean enterprise. Those are a means to a
greater end.

So, what has happened in the last, well, 20 years that I've been doing this; people have
been enamored by the tools. They apply them and they think they are "finished". And I
always respond and say, "No, now you can begin." And they say, "What do you mean?"
And so well now you have the foundation for the system in place. Now you can begin.

Now you can really engage your people to drive continuous improvement over time. You
may not get the big break through improvements that we did by the application of the
tools. Then we start getting to the more incremental improvement opportunities, but that
all well and good. That's what we're after, getting that culture for continuous
improvement. Then and only then will it sustain.

Joe: Is there anything you'd like to add to the conversation?

Value Stream

Drew: I'd really like to talk about are future state mappings. We didn't talk too much
about that beyond loops. One of the other misuses of the tool of value stream mapping
is people send us maps to review all the time. I'm on the faculty of the Lean Enterprise
Institute and people send in their maps and they'll often distribute those to the faculty.
And often I will see a current state map and Ill respond to the person and say, "Where's
your future state?" "Well we didn't do that." And I would say, "Well, you've wasted your
time".

Or they'll send me a current state map with like a hundred posts it notes around it of
improvement opportunities and I'll ask, "What did you do?" And they say, "Oh, we
brainstormed. Everyone had a chance to brainstorm. Anything they could think of in
terms of improvement." And I respond to that with this basic statement, "Don't ever do
that again."

What people are failing to miss in the use of the tool is that it allows you, if used
properly, to create future states. System redesigns based on the concepts of value flow,
pull, leveling, and perfection. That doesn't happen by chance, that happens by intent.
And what that means is people need to use what we call the future state questions
which embody lean thinking.

And those questions will prompt a discussion that will encourage organizations or teams
within organizations to apply the lean concepts. So we don't want to do is just do a
brainstorming exercise and come up with any improvement ideas we can. We want to
fundamentally challenge what we're doing, how work flows. And I don't find
brainstorming as an excellent approach to that. What I find to be a better approach is
thoughtful discussion of how to apply value flow, pull, leveling, and perfection to any
business system.

Value Stream

So, when I do my workshops and speak and conferences, I always ask people to raise
their right hand and promise me that they will use the future state questions. I think also
they're just being polite when they respond, but I sincerely mean it because a current
state without a future state map is waste. And we don't want to do that. And a future
state map that really doesn't fundamentally change how work flows is just waste as well.
So we've got to use the tool fully as it was intended. And I think that's one of the other
common pitfalls I see is future states that are just not well designed -- not well thought
out.

Joe: You start the process with the whiteboard and put the post it notes up there and
then draw the lines on the whiteboard or organize them across as you do it. Then you
see people typically taking a picture of it and putting it in a file? Or do you see them
taking the picture of and hanging it out on a bulletin board for everyone to see?

Drew: That's a great question. Too often I see people putting it in a filing cabinet never
to see the light of day. And with the companies I work with, when we actually walk the
flow, when we do an ISG map, I'm always looking for wall space, because that's where
we're putting the current state and the future state map when we're done with it.
And then we need to continually go back to it. I'm working with a company in New Jersey
right now for this entire year. We did their enterprise map in February. Every Kaizen
event that we did subsequently, I took the group, the Kaizen team, and went through
that map with them to explain to them where they were, where they're going, and why
this Kaizen event is important in the big picture of redesigning their overall business
system.

Every single mapping event, the specific business processes, and every Kaizen event of
any business process, I review that enterprise map that we did back in February to bring
it all back together. That's how the tool should be used. If the map goes into a file

Value Stream

cabinet, which happens, and it's one of my pet peeves and I tend to go off when I see
this, you can't even have that dialogue. It’s out of sight, out of mind, and the map
becomes just out of date, just becomes useless and that's not how it should be used.
That's a great point you bring up.

Joe: OK. Well, I wanted to thank you very much for your time, Drew. It was very
informative. I think it will be a great podcast of people to listen to. You'll be able to
download it on the Business901 podcast site but also from Business901 iTunes store. And
again I thank you very much for your time. I appreciate it.

Drew: Thank you for the opportunity. I appreciate it.

Value Stream

Joseph T. Dager
Lean Six Sigma Black Belt

Ph: 260-438-0411 Fax: 260-818-2022
Email: jtdager@business901.com
Web/Blog: http://www.business901.com
Twitter: @business901
What others say:
In the past 20 years, Joe and I have collaborated on many difficult issues. Joe's ability to combine his
expertise with "out of the box" thinking is unsurpassed. He has always delivered quickly, cost
effectively and with ingenuity. A brilliant mind that is always a pleasure to work with." James R.

Joe Dager is President of Business901, a progressive company providing direction in areas
such as Lean Marketing, Product Marketing, Product Launches and Re-Launches.
Business901 provides and implements marketing, project and performance planning
methodologies in small businesses. The simplicity of a single flexible model will create
clarity for your staff and as a result better execution. My goal is to allow you spend your
time on the need versus the plan.

An example of how we may work: Business901 could start with a consulting style
utilizing an individual from your organization or a virtual assistance that is well versed in
our principles. We have capabilities to plug virtually any marketing function into your
process immediately. As proficiencies develop, Business901 moves into a coach’s role
supporting the process as needed. The goal of implementing a system is that the processes
will become a habit and not an event. Part of your marketing strategy is to learn and
implement these tools.

Value Stream

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