What is lean culture – and how to measure it? Noémi Imre ([email protected]) Corvinus University of Budapest, Hungary István Jenei ([email protected]) Corvinus University of Budapest, Hungary Dávid Losonci ([email protected]) Corvinus University of Budapest, Hungary

Abstract The use of lean management in healthcare sector is extensively spreading just like the academic interest toward the topic. Although many authors emphasize cultural receptiveness as a prerequisite to successful lean transformation in healthcare, there has been little effort taken to understand what the “ideal lean culture” is like, and to provide a tool to measure the “leanness” of existing cultures. In our work we provide deeper understanding of how the intended “lean culture” can be captured and the existing culture measured. Trough the case of an outpatient clinic the elaborated measurement system is tested. Keywords: lean management, healthcare, organizational culture

Introduction The use of lean management in healthcare sector is extensively spreading just like the academic interest toward the topic (Brandao de Souza, 2009; Radnor and Holweg, 2010). The majority of the related publications agree that lean management can bring gains of several kinds (Kollberg et al., 2007). However, the sustainability of these gains is suspected if caregivers keep using some lean tools only to improve just some parts of the whole patient path (Radnor and Holweg, 2010). To reach the full potential of lean management, its tools and principles must be used in ‘bundles’ (Shah and Ward, 2003). Moreover the “blaming culture” prevalent in hospital organizations is a significant obstacle to success. Its approach is diametrically opposed to the lean way of thinking (Spear, 2005). The blaming culture, it is the task and responsibility of the medical and the nursing staff to cure people. Therefore, if an error is committed, it is the responsibility of these individuals; the error is due to their incompetence (Furman and Caplan, 2007). This mindset must be transformed by lean so as to make error-proofing the accepted norm. 1

Similarly without top management commitment and support lean can only be a shortlived and isolated local initiative (Radnor et al., 2006; Fillingham, 2007). Organizations must build readiness to accept lean, by changing silo thinking into process thinking, understanding customer value, applying organizations must not just use tools but also align its culture with lean (Randnor et al, 2006). Finally, successful and lasting lean transformation cannot happen without the alignment of existing organizational culture with the culture that supports lean management (Shook, 2010). The organizational culture must provide a solid base to lean management system. The values, assumptions that are deep embedded in the everyday’s life must fit to the philosophy behind lean management. (Liker, 2008). Although many authors emphasize cultural change as a prerequisite to successful lean transformation in healthcare, there has been little effort to provide a tool to measure actual organizational culture relative to the culture that could be seen as “ideal” to support lean management. In this paper we first define and give a short description of lean management and review its use in healthcare. Then we shortly discuss definitions of organizational culture, and describe Toyota’s culture as the “ideal lean culture”. In the following section quantitative models of organizational culture are introduced and a new measurement tool that suits lean environment is proposed. Then a case of an outpatient clinic is presented, where lean culture is assessed by the new model. Finally, the findings are shown and discussed, and conclusions are drawn. Literature review Lean management Lean production has evolved concurrently with the development of Toyota’s production practice over the years. Surprisingly, the system was not recorded in writing until 1965: it could only be learned from the practice of the plants (Holweg, 2007). Its first English description was released in 1977 by Sugimori et al., followed by a series of works devoted to the components of the system. Researchers, however, sketched several variants of the system, even if they inspected the same company. Since the lean system actually denoted Toyota’s continuously developing production (and management) practice, it is virtually impossible to provide a precise and up-to-date description of the system. Therefore, researchers and managers must content themselves with developing their own interpretation of lean management based on past information. What seems to be generally agreed by the researchers is that lean management has a dual background: (i) firstly, the totality of tools, methodologies observable in the production organisation/management practice of the Toyota plants (kanban, SMED, andon etc.), (ii) secondly, the philosophy and the principles which have led to the emergence and continuous development of these tools (Womack – Jones, 1996; Shah - Ward, 2003; Hines et al., 2004). The article by Hines et al. (2004) make a clear distinction between the lean production system, meaning the application of (operational) tools designed for the development/management of production area, and the application of lean thinking as a strategic approach. Based on these notions and the definition provided by Shah and Ward (2007), we can describe lean management as: an integrated socio-technical system whose main objective is to efficiently satisfy customer needs by continuously striving for customer value, continuous flow and waste elimination in processes. 2

Lean management in the healthcare sector It is not exactly known when and where the spread of lean management in healthcare sector started. It is not clear either how many institutions have tried to apply the system or its tools until now. Graban (2009) puts the number of institutions where the process has already started to several hundreds. Powell (2009) says, with reference to Doug Dulin, Director of the consulting firm “Lean Six Sigma for International Capital and Management”, that around 10% of hospitals in the US apply lean and six sigma methodology. Probably the first of the ever growing number of prominent examples of lean transformation in healthcare is Virginia Mason Medical Center, Seattle (USA) (Spear, 2005). Its European counterpart is the British NHS hospital in Bolton (Fillingham, 2007). According to the technical literature, the national health service of the United Kingdom has made the most progress globally in the systematic introduction of lean principles (Proudlove et al., 2008). A British research carried out in 2008 concludes that lean is present in 53 percent of the 152 registered hospitals of National Health Service (Burgess et al., 2009). However, at most places it was in initial stage only. Organizational Culture The importance of organizational culture gained high attention in the 1980s. The recognition of its importance was enhanced by the superior performance of Japanese firms over their American counterparts, and the rapid development of knowledge-intensive technologies which highlighted the importance of humans. These factors led to the revelation of the linkages between organization culture and organization performance. Thus it became accepted that organization culture is not just a soft business issue, but based on its influence on performance and effectiveness, it is rather a strategic competiveness factor. (Cameron-Quinn, 1999) Organizational culture is defined in several ways depending on the viewpoint of the researcher (objectivist, subjectivist, etc.). In our research we identify our approach as objectivist/functionalist. According to this view organizations are depending on their environment, and must adapt to it. The functionalist researcher examines the organization from a distance, objective, system-minded, and aiming to discover the cause-effect relations within the organization, and provide solutions to problems. For our research we use the definition of organizational culture provided by Schein (1992) because (i) it fits to our research approach; (ii) it is well known and broadly accepted; (iii) coherent with the learning organization concept used in our study; and (iv) one of the most important source that describes Toyota culture (Liker – Hoseus, 2008) uses also this definition. According to Schein (1992 p. 12) culture is: „A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” The „ideal lean culture” The starting point of our research is the notion that any organization where lean management is intended to implement should have a culture that supports lean initiative. However, it may not fully clear what is the culture like that fits the best lean management. In this section we identify this culture based on the widely accepted fact that the roots of 3

lean management are originated in the Toyota Production System (TPS) and Toyota is still the most cited example of a high performing lean management system. Thus in our research we assume that the organizational culture of “Toyota” incorporates “ideal lean culture”. Furthermore, we also assume that “Toyota culture” exists. Although it is evident for us that within a giant globalized organization such as Toyota Motor Corporation with its more than 300 thousands employees there are several, maybe several hundred subcultures. However, in our opinion there is a traditional or “supra” culture that is deliberately kept and enforced. Some elements of this traditional or supra culture we can identify in articles and books describing TPS (e.g. Ohno, 1988; Monden, 1986; Womack et al., 1990; Spear and Bowen, 1999; Spear, 2004; Liker, 2004, Liker and Hoseus, 2008). The most common element of these descriptions of Toyota culture is continuous improvement or scientific experiment. This experiment means hypothesis testing which in turn can be identified as the base for the continuous learning within the organization. The other most common elements are the long term thinking and the emphasis on people (respect, involvement). Within these three main features there are several others to mention. These features are listed in Table 1. Because perhaps the book by Liker and Hoseus (2008) the one which provides the most complete picture of the Toyota culture, we use that as source for Table 1. Table 1. Features of the Toyota culture Source: based on Liker and Hoseus (2008)

• • • • • • • • •

Long term thinking Human focus Respect Commitment, loyalty Cooperation Trust, sincerity Tidiness Conflict acceptance Continuous attention toward the external environment • Customer focus • Innovative spirit

• Treating employees as partners • Responsibility • Employee involvement • Employee suggestions • Support • Process-thinking in decision making and problem solving • Personal involvement • Trainer leaders • Forwarding goals • Consistency • Rewarding guidance • Tolerating failures

• Two ways, open communication channels • Rights to feedback • Constructive critique • Regular information and knowledge sharing • Discussions • Visual management • Employee development • Learning from experience • Minimizing losses • Finding root causes • Self critique • Searching for development opportunities

Measuring Organizational Culture The aim of the culture research can be comparison or deeper understanding. We can compare two or more organizations, or we can track changes in culture of a single organization in time. Analysis can be made in one or more points in time, for short or even for longer periods. When the research aim is to gain deeper understanding, the researcher is examining the organization as it functions for the time necessary. The method of organization culture research can be qualitative or quantitative. Qualitative researches are aiming a deeper understanding of organization culture. Common qualitative research methods are the different types of interviews and 4

observations. Qualitative researches usually fit to the subjectivist approach, thus the multilateral meaning of a phenomenon is emphasized and consciously sought. Quantitative researches examine organization culture along the typical organizational dimensions (integration approach). These types of researches see organizational culture as dependent variable, and seek cause-effect type of relationships between the culture and the various outcome variables. This logic reflects a functionalist approach. Popular tool of quantitative researches are surveys. Most of these intend to capture organizational culture by asking respondents to indicate the degree of agreement/disagreement regarding pre-defined cultural values and norms. (Hofstede et al., 1990; House et al., 2004; Toarniczky, 2007) The advantage of quantitative surveys is the repeatability, thus they make possible to compare cultures of organizations, or more stages in the culture of a single organization. However, their disadvantage is that they only provide a starting point to deeper understanding and explanations. There exist two main types of organizational culture surveys: categorizing and descriptive. The limitations of categorizing surveys are that categories can be confusing, since they do not take into consideration that the same organization in one aspect may fall into one category, while in other aspect into another. Moreover, they fail to recognize that different organizational groups would perhaps fall into different categories. Descriptive surveys intend to show features of organizational culture along various numbers of pre-defined dimensions. In our research we use this second type of survey. Developing the “lean organizational culture” questionnaire Since organizational culture is a complex phenomenon, it is impossible to develop a questionnaire that would capture all of the possible cultural dimensions (Cameron and Quinn, 1999). Therefore any questionnaire must be tailored according to the research aims. Thus a questionnaire is likely to capture only some selected features of the organizational culture (for more on this topic see Fischer et al., 2004). As our aim here is to evaluate the degree to which an organizational culture matches with “ideal lean culture” a questionnaire is needed that focuses on dimensions related to lean management – that are seen as special in Toyota’s culture. It is difficult to find this kind of questionnaire in the related literature, we decided to develop one. As the starting point we took the special cultural features of Toyota described earlier in this work. We grouped these features into eleven dimensions. Here we used ten dimensions describing characteristics of a learning culture (Schein, 1992). We did this based on the notion that the Toyota culture shows also the characteristics of a learning organization (Liker, 2004). However, we emphasize that we regard “ideal lean culture” more complex than “learning organization”. Therefore we added one more dimension namely control. We developed to each dimension one or two statement that can reflect the related content. These statements were shown in the previously defined groups on the questionnaire. Respondents must indicate their agreement or disagreement of these statements using a six-grade scale. Filling in the questionnaire takes approximately 15 minutes. The questionnaire is shown in Appendix. Research design In order to test the applicability of the above described organizational culture evaluation tool, it was applied in the case of an outpatient clinic, where the first steps of lean 5

transformation take place. In this section we shortly introduce the clinic and provide the description of the circumstances of the examinations that took place. The clinic The St. Margaret Ltd. is a not-for profit healthcare provider owned by the local government of Óbuda-Békásmegyer, the third district of the city of Budapest since 2003. The mission of the clinic is to provide outpatient services to the population of the district and the near neighbourhood. The size of the served population is over 130 thousand inhabitants. The clinic provides the full range of outpatient services in 25 different specialities in 2015 hours a year. The management of the clinic is committed toward the high quality services. To assure high quality service the institution is holding the ISO 9000-2000 certification and runs a quality assurance system that satisfies the prescriptions of the Hungarian Healthcare Service Standards. To track the performance an indicator system is operated and its results are regularly evaluated. (www.obudairendelok.hu, 2011) In 2009, in order to gain some experience in lean management and to use the potential of lean to further improve service quality level, the management of the clinic initiated collaboration with researchers of the Corvinus University of Budapest. The initial aim of the collaboration was to reduce patient waiting time in a selected department by rationalising the customer guidance system. After the preliminary evaluation of the operations of, and the first communication with the departments the Neurology was selected for the pilot project. The Neurology Department operates with seven doctors and two assistants. During the pilot project a multifunctional team of two doctors, an assistant, a supervisor/vice supervisor of the customer guidance/reception department, an IT representative, the chief doctor and the lead nurse of the clinic and one-tree researchers was working together. The team had working sessions with the intensity of two hours time in two weeks in average. The survey The organizational culture survey was done during the spring of 2011, after one and half year of the start, and close to the finish of the pilot project. In the survey participated the pilot project’s all stakeholders - expect the IT representative. The questionnaire was filled in by the seven doctors and two assistants of the Neurology Department, six employees of the customer guidance/reception and the three person of the top management team.

Results and discussion The results of the survey are shown in Figure 1. Along the radar chart there can be seen the average values the clinic employees (and managers) agreed with the statements provided in the questionnaire.

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Organizational-Environmental Relationship 6,0 Control Nature of Human Activity 5,0 4,0 3,0 Linear Versus Systemic Field Logic Nature of Reality and Truth 2,0 1,0 0,0 Task Versus Relationship Orientation Nature of Human Nature

Subcultural Uniformity Versus Diversity Information and communication

St, Margaret healthcare-provider

Nature of Human Relationships Nature of Time

Ideal lean culture

Figure 1. – The average values given by respondents by categories

The inner line on the chart clearly indicates that, according to the opinion of the respondents the culture of the clinic is not yet at the level of the ideal lean organization – the Toyota. This result is expected, knowing that the clinic is at the beginning of its lean journey. What seem to contradict to our expectation are the consistent high average values. In the background of this unexpectedly high score there could be several different elements. • There could be the effect of average – low and high scores counteracting and hiding the real differences. • Biased responses; o Respondents did not fully understand the questioner generally, or o Respondents did not take the time to think of the statements and simplified the response by picking middle range scores, or o Respondents were partial when evaluating the culture. • It could also be that the statements were nor formulated clearly enough, or • There also can be that our initial impressions were not correct but the survey. To date we cannot exclude any of these explanations. We need to further investigate all these competing possibilities. Summary In our paper we presented the way how the questioner to evaluate lean organizational culture vas developed and tested. We also showed the results of the survey, which seem to contradict the expected outcome. Therefore we cannot take this questioner as proven tool, but need to further investigate the situation, and discover possible biases. Acknowledgments We have to say special thanks to the management and the employees of the St. Margaret Ltd. for making it possible to research their organization. This study was supported by the program TÁMOP-4.2.1/B-09/1/KMR-2010-0005 ”Tendencies in international economy and the competiveness of the Hungarian business sector” subproject.

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Shah, R. – Ward, P.T. (2003): „Lean manufacturing: content, practice bundles, and performance”, Journal of Operations Management, Vol. 21, No. 2, 129–149. Shah, R. – Ward, P.T. (2007): „Defining and developing measures of lean production.” Journal of Operations Management Vol., 25, pp. 785-805 Shook, J. (2010): “How to Change a Culture: Lessons From NUMMI”, MIT Sloan Management Review, Vol. 51., No. 2, pp. 63-68. Spear, S. (2005): “Fixing Health Care from Inside, Today”, Harvard Business Review, September, pp. 78-91. Spear, S. – Bowen, H.K. (1999): „Decoding the DNA of the Toyota Production System”. Harvard Business Review, Sept-Oct. pp. 97-106. Toarniczky, A. (2007): “The culture of measuring organizational culture”, Budapest Management Review, Vol. 38, Special issue, (in Hungarian) Womack, J. – Jones, D. (1996): Lean Thinking, Simon and Schuster, New York, NY Womack, J. P. – Jones, D. T. – Roos, D.(1990): The Machine that changed the world, Rawson Associates, New York www.obudairendelok.hu, 2011-05-16

Appendix The statements of the “lean organizational culture” questioner (Original categories by Schein (1992) are in the dark cells.) Organizational-Environmental Relationship We are listening to customers. Constantly meeting customer's needs is in the focus of the organization. Nature of Human Activity People are open toward new ideas that may make work easier or better. People typically experiment new ideas and accept related risks. Emerging problems are seen as opportunities. Continuous search for possible improvements is part of the daily routine. Nature of Reality and Truth Task are normally standardised in order to make benchmarking and measurement easier. Problem solving is about finding route causes. Nature of Human Nature Trust is generally present. I am committed to the main goals of our organization. Employees report failure without fear of blame. Managers and employees may also criticize themselves. Nature of Human Relationships Managers cooperate with employees. Team goals dominate individual goals. People show loyalty toward the organization. People respect each other here. In their work employees try to learn from each other. Decisions are made, problems are solved in teams rather than by individuals. Managers are reliable. Managers support employees' ideas. Expectations are high toward employees, but managers support employees' to meet expectations. Managers actively participate in problem solving activities. Nature of Time Long term goals dominate short term goals. Long term effects of decisions and actions are taken into consideration. It is typical to plan for the future. Information and communication

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Performances of groups are not interdependent, so they have to cooperate. Honesty is typical here. Regularity and consistency are part of our everyday work. The expectations towards me are clear for me. The main goals of the company are clear and understandable. Communication here is open and honest. Two-way communication is typical here: top down and bottom up work in parallel. Meetings are held regularly. Date and agenda of meetings are planned in advanced. There are no ad-hoc meetings. Suggestions are managed and evaluated in a formalized system. New information and experiences are shared and diffused within the organization. Managers share operational information with employees regularly in a structured way. Visual management tools are used (e.g., data box). Peers provide each other feedback on performance openly and honestly. Constructive critique is usual here. Sub cultural Uniformity Versus Diversity One will express his/her opinion even if it differs that of others' Employees face conflicts instead of hiding problems. It is typical to accept conflicts and debates in order to find better solutions. Consensus is sought in decision making process. Task Versus Relationship Orientation Managers consider all stakeholders' interests. Managers are rather coordinating while workers are enjoying autonomy in conducting tasks. Managers regard employees as partners. Managers welcome employee ideas. Employees support each other to develop. Linear Versus Systemic Field Logic Social relations and interests are considered when organizational decisions are made. Our organization is seeking cooperation with the other members of the supply chain. The goals are challenging. The organization strives for perfection. Employment security is reality. Control Managers regularly audit performance. Employees regularly conduct self-check. Good performance is rewarded. Salaries are based on performances. Failures are not punished. Their root causes are identified instead. Innovations and improvements are rewarded.

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