Connecting your Executive Board with your Lean Six Sigma Implementation

1. Connecting your Executive Board with your Lean Six Sigma Implementation Presented to: Lean, Six Sigma & Business Improvement Summit Presented by: Doug Dulin, LM, MBB Date: June 24, 2009

2. Connecting your Executive Board with your Lean Six Sigma Implementation After this session you will: • Understand why the connection is important • Understand the changing roles and responsibilities of your executive board within a Lean Six Sigma Environment • Understand how you can engage your executive board for greater implementation success

3. Why do we want to connect our executives with our LSS Implementation? Executives Leadership Customers Employees LSS Implementation Plan

4. What does this mean without connection? • What if 1 class of 30 students in your A3 or Green Belt Training could deliver $700,000 to the bottom line within 10 weeks? • What if you held a 5-day kaizen event that resulted in a $3.5 million cost avoidance to the capital budget? • What if you held a 10-day Black Belt course over 4 months and were able to solve strategic issues and impact your organization with more than $1.4 million?

5. Why do we want to connect our executives with our LSS Implementation? Customers Executives Leadership Suppliers Employees Implementation Plan

6. Why do we want to connect our executives with our LSS Implementation? Executives Customers Executives Leadership Leadership Customers LSS Plan LSS Plan Employees Employees Which Company are You?

7. Lean Six Sigma as a Strategic Driver • The Lean Six Sigma program enables your company to drive results and can be further developed with a 3-part framework driven by your executive group • This is a key area where executive leadership is needed • Achieve alignmentacross the business leadership team • Mobilizeteams to take focused action • Accelerate teams to accomplish the desired results *Adapted from The Corporate University Handbook by Mark Allen, Ph.D.; “The Corporate University as a Strategic Lever” by Tom McCarty

8. Economic Conditions Greater World Competition Slowing Improvements Need to add value for the customer Employee turnover Compelling Case for Change

9. Performance and Quality Improvement Lean Six Sigma as a Strategic Driver *Learning is most effective when it has executive support, is linked directly to a key business problem or strategic initiative and is active. *Adapted from The Corporate University Handbook by Mark Allen, Ph.D.; “The Corporate University as a Strategic Lever” by Tom McCarty

10. Lean Six Sigma as a Strategic Driver • Align – (Hoshin Planning) • Success is not measured in terms of hours of coursework completed, but rather in terms of achievement of results • These results should be driven by and aligned with your organization’s strategic drivers—these could include: • Quality of Care • Patient Satisfaction • Operational Efficiency • Leadership can measure success by establishing stretch goals in these categories

11. Executive Boards view Value View Value in terms of dividends and share price appreciation Value is defined in terms of the return a shareholder receives as a result of owning shares in a company Views values as the present value of all future Free Cash Flow Traditional View of the Executive Board

12. What is the Executive Board looking for in the Lean Six Sigma Implementation? Improved Customer Satisfaction Improved Financial Results Improved Return on Investment The Key Advantage within the Market Place The Benefits of Lean Six Sigma

13. Lean Six Sigma Key Improvements Touching every department of the organization A3 Implementation Graduation over 50+ Candidates Green Belt Program with certifying key leaders Kaizen events for quick, good change Leadership that drives the implementation Lean Six Sigma Client Case Study

14. LSS Implementation Benefit Analysis 10 Month Period

15. Competitive Analysis

16. Linking 3 Key Items Executive Team Corporate Strategy Management Team Lean Six Sigma Implementation Daily Management Front Line Leaders Stakeholders All are controlled by process control systems and measured frequently

17. Align Your Executive Board • What can your Executive Team Do? • Start with the key drivers (pull from the strategic plan) • Support to define key goals and objectives of the organization. • Support in the Hoshin Planning Session. • Make available any needed resources that will support in becoming successful in the Lean Six Sigma Implementation • Assure that all barriers are removed

18. Alignment with Implementation • Hoshin Planning – (Strategy Deployment, Policy Deployment) • Alignment requires something beyond independent creation of strategies • Linking the Corporate Strategy and Lean Six Sigma Transformation • Two Key Processes • Annual Planning Process (Key summit where the executive team can support by taking an active role) • Monthly Hoshin deployment meeting

19. HOW HOWFAR HOW MUCH All itemsare listedin priority order Top Level Improvement Priorities Annual Breakthrough Objectives Targets to Improve 3-5 Year Breakthrough Objectives WHAT Hoshin Planning Matrix WHO Annual Metrics RESOURCES = Primary Responsibility = Secondary Responsibility OWNER

20. Linking Key Projects Whole System Measures Value Stream Contacts Commercial Records Ins. Submitted Ins. Approved Appt. Made Appt. Kept Tx. % Qualified Calls OIS Quality Response Time % pt. Preferred % Apt Kept Time to Tx. Quality Call Volume Appts made To Plan Growth Productivity Canceled Appts Profit Accessibility

21. Project Filter

22. Canceled Appointments Project Selection Kaizen Direct Scheduling Handoff Time to Appointment Six Sigma Pre-Op Instructions A3

23. Lean Six Sigma as a Strategic Driver • Mobilize • Ensure that LSS projects and initiatives have leadership buy-in and support. Project Champions are critical to mobilize and enable project teams. • LSS students are working on specific projects during training sessions. • These projects are directly tied to the aligned strategic drivers • Individuals with critical leadership roles in the implementation must also receive focused support

24. Mobilize Executive Board • Mobilize • Practice the new standard work of an executive leader in the Lean Six Sigma Environment • Take part in Gemba Walks with the leadership team • Attend Lean Six Sigma reviews and ask questions • Attend Kaizen Report out sessions and thank the Kaizen Team

25. The roles of leaders are changing to drive continuous improvement Leadership’s sole purpose is to drive continuous improvements to improve the patient experience. Leaders Coach and Mentor Leaders ask probing questions. The New Role of the LSS Leader

26. Challenge the process Inspire a clear, shared vision Enable others to act Model the way Encourage the heart Lean Six Sigma: The Role of the Board of Directors *Adapted from The Leadership Challenge by Kouzes and Posner (1995)

27. Personal understanding and commitment to deployment—send a clear message: everyone is responsible for quality and safety Integration of Lean Six Sigma into other programs and initiatives Create a sense of urgency Lean Six Sigma program integrity (including people selection, credibility of results, institutionalization of methods, and reviews) Demand performance improvement—but know and understand that not every idea will be successful Expect transparency—and celebrate when teams air their “dirty laundry” Remove barriers Personal engagement (including attendance at project kick off meetings, tollgates, graduations, etc) Lean Six Sigma: The New Role of the Executive Suite

28. Understand methods and tools enough to ask questions Linkage of operational performance metrics to business metrics Accountability—audit standard work, project metrics, etc Expect and demand use of Lean Six Sigma tools Project identification process Dedication of staff time for training and project completion Personal engagement (including attendance at project kick off meetings, tollgates, graduations, etc) Remove barriers Recognize project leaders and publicize success Lean Six Sigma: The New Role of the Vice Presidents

29. Here are some example Lean Six Sigma questions These questions follow the DMAIC problem solving methodology Lean Six Sigma: The New Role of Leadership

30. Is the project important to our customers? What is the problem statement? When was the problem first seen, where was it seen, and what is the magnitude? Is the problem measured in terms of Quality, Safety, Cost Efficiency, Patient Experience, or Employee Experience? Does a goal statement exist that defines the results expected to be achieve by the process? Is the goal a SMART goal? Does a financial business case exist, explaining the potential impact in measured in dollars of the project on the business? Is the project? Have constraints been identified? Who are the customers of the project? How will they be involved in the project? How will progress be communicated to them? What kinds of barriers / obstacles will need assistance to be removed? Define Tollgate Questions

31. Has the team conducted a value-added and or cycle time analysis, identifying area where time and resources are devoted to tasks not critical to the customer? Has the team identified the specific inputs (x), process (x) and output (Y) measures needing to be? Has the team developed clear definitions for each measurement and tested them with others to ensure clarity and consistent interpretation? Has a clear, reasonable choice been made between gathering new data and taking advantage of existing data? Has baseline performance and process capability been established? Measure Tollgate Questions

32. Has the team examined the process and identified potential bottlenecks, disconnects and redundancies that could contribute to the problem statement? Has the team analyzed data about the process and its performance to help stratify the problem, understand reasons for variation in the process and generate hypothesis as to the root causes of the current process? Has an evaluation been done to determine whether the problem can be solved without a fundamental recreation of the process? Have any new risks to project success been identified? Analyze Tollgate Questions

33. What lean or six sigma techniques were used to generate ideas? What screening techniques were used to develop potential solutions? What criteria were used to select a recommended solution or solutions? Do the proposed solutions address all of the identified root causes, or at least the most critical? Were the solutions verified with the Project Sponsor and staff members? Has the proposed solution been documented, including process participants, job descriptions and if applicable, their estimated time commitment to support the process? Has the team been able to identify any additional “Quick Wins”? Improve Tollgate Questions

34. Has the team prepared all essential documentation including the Standard Work Instructions, training plan, training matrix, and a control plan? Has the necessary training for process owners / staff members been performed? If not, when will it? Has the solution being effectively implemented? How do we know? Has the financial benefit been approved by the finance team? Has the process been transitioned to the process owner? Has a final storyboard documenting the project work been developed? Is there a best case (best practice) from the project be used by other areas or departments? Control Tollgate Questions

35. Lean Six Sigma as a Strategic Driver • Accelerate • LSS stands apart from other project management techniques in part due to the accelerated time frame that is built into the process improvement initiative. • Kaizen (Rapid Improvement Week) = 5 days • Green Belt Training = 10 days (over the course of 4 months) • E3 Training = 16 hours (over the course of 8 weeks) • Success in an accelerated time frame requires that the team members learn while doing—with enough support so that they can reach breakthrough improvements • In addition, LSS builds in systematic and clear objectives that are due at each phase of the process. • Tollgate Sessions (at Define, Measure, Analyze, Improve and Control) • A3 coaching (weekly sessions)

36. Breakthroughs lead to competitive advantage Extinction Survival Industry Excellence Continuous Improvement Lean Six Sigma Breakthrough Process Knowledge Goal Goal Goal Actual Actual Actual Output Output Output Baseline Baseline Baseline Time Time Time Breakthrough improvement with long term sustainability Initial improvement typically not sustainable Steady improvement very slow pace

37. Accelerate Executive Board • Accelerate • Get the Executive Board to understand your Lean Six Sigma Implementation Tools • Get the Executive Board to conduct Process Owner Training • Get the Executive Board to attend Belt Toll Gates • Get the Executive Board to attend kaizen final presentations

38. Understand LSS Curriculum The Lean Six Sigma organization currently supports the following Lean Six Sigma Elements: • E3 Performance Improvement Program • E3 Process Owner Training • Lean Six Sigma Champion Training • Kaizen—Lean Training • Lean Six Sigma Green Belt Project Management • Lean Six Sigma Black Belt Project Management

39. Lean Six Sigma Journey • Deployment Tactics • E3 Performance ImprovementSM Program • Six Sigma Green Belt Training and Projects • Kaizen Events

40. Lean Six Sigma E3 Program Methodology • 8 week course • 2 hours per class • 1 hour “homework” • 15-30 students • Offered twice per week • Complete one project • Graduation ceremony Description • “Essence of Lean” • Staff driven • Bottom up • Enabling process • Numerous but small projects

41. E3 Project Examples • Reduced patient wait time for DMSA Radiology procedures from 17 minutes to 0 minutes. • Improved flow of Clinic by reducing Patient Non Value Added Time by more than 30%, while Increasing Appointment Capacity by 2 appointments per month. • Improved Compliance of Medication Reconciliation Documentation from 10% to 100%. • Reduced Charge Errors in an Emergency Room Supply Tower from 19% to 6%--resulting in more than $25,000 in increased net revenue • Reduced the time spent searching for charts in pediatric clinic from an average of 14.3 minutes to an average of 3.8 minutes per chart, resulting in NVAT reduction of 4.2 hours per day. • Reduced excess inventory in key storage areas from 178 cubic feet to 17 cubic feet.

42. Lean Six Sigma Process Owner Training • E3 Process Owner Training: Developing Lean Leaders and your business organization • 3 Sessions • Prior to start of E3 Class • Mid-session • Prior to Graduation • Designed to help middle-management understand • What is Lean? • What is E3? • Understanding and Managing Lean Projects • Challenges of Managing Change

43. Lean Six Sigma Belt Examples • Managed Care Improvement • Antibiotics prior to surgery • Nurse Retention Rate • Tool Cost Reduction • Resident Rounding • Cytogenetics • MRI Utilization

44. Lean Six Sigma Kaizens Examples • CCL Baseline Kaizen generating 312 UDOs • Increased capacity of Sterile Processing Department from 13,000 to 16,000 cases annually • Reduce Inventory by $3.6 Million Description • Business strategic plan • Top down • Significant and rapid change (rapid improvement week) • Short term intensive concentrated effort by lots of employees • 24 to 36 per year

45. Drive toward standardized work in all areas. Embrace constant, rapid continuous improvement in all departments. Design the organization for success and change the way we lead by the way we lead. Support, sustain and share the learning throughout the organization. Drive the organization toward perfection. Sustaining LSS Results

46. Executive Board Connection to the LSS Implementation Conclusions • Their support is key to the LSS implementation success • Engage them through Align, Mobilize and Accelerate • Have them to go to the Gemba and ask questions • Attend an E3 Graduations, Green Belt Toll Gates, Black Belt Toll Gates, Master Black Belt Boards and or a Kaizen Events and ask questions. • Now is the time for change!

47. What does this mean with a total team connection? • What if 1 class of 30 students in your E3 or Green Belt Training could deliver $700,000 to the bottom line within 10 weeks? • What if you held a 5-day kaizen event that resulted in a $3.5 million cost avoidance to the capital budget? • What if you held a 10-day Black Belt course over 4 months and were able to solve strategic issues and impact your organization with more than $1.4 million?

48. ICMC Lean Six Sigma Consulting Group Doug Dulin – Director Lean Six Sigma, LM / MBB Email: dulind@icmcvi.com Web Site: www.icmcleansixsigma.com ICMC Lean Six Sigma Consulting Group is the leading Lean Six Sigma (LSS) implementation consultant in the U.S. healthcare industry, with more than 75 years combined experience in LSS strategies. Our experienced team aligns its LSS solutions with your strategic business objectives and performance improvement goals.

49. Works Cited • Allen, Mark, Ph.D. The Corporate University Handbook “The Corporate University as a Strategic Lever” by Tom McCarty • Hall, Melvin. “Looking to Improve Financial Results? Start by Listening to the Patients”Healthcare Financial Management Magazine, October 2008. www.hfma.org • Wheeler, Kevin. The Corporate University Workbook: Launching a 21st Century Learning Organization. 2004.

50. Thank You.