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My guest for Episode #454 of the Lean Blog Interviews Podcast is Damon Baker. He is the founder and CEO of the firm Lean Focus. He's also a Private Equity Partner at Coltala Holdings.
Damon Baker has been implementing Lean practices in various GM & VP-level capacities for more than 25 years, but it was at Danaher, where he worked for nine years, that his passion for true business transformation was born. He was instrumental in developing Danaher's company-wide Problem-Solving Process, and was inspired to create a new, comprehensive business system that enables organizations to improve on all fronts.
He has worked in a Shingo Prize-winning facility and is a Shingo Prize Examiner.
Over his career, Damon has demonstrated hands-on leadership and facilitation of 500+ kaizen events in close to 100 major corporations in 16 different countries.
Today, we discuss topics and questions including:
- How did you first get introduced to Lean or TPS — what was the context and the circumstances?
- Want people to have a positive experience with Lean…
- Evaluating someone's lineage?? Company, influences, who they learned from??
- What were the key components of the Danaher Business System — and why a “business system” instead of a “production system”?
- You say “The Lean community has a marketing problem” — why is that and how do you define that problem?
- Our language vs. the language CEOs speak
- CEOs care about value creation, making the quarter, how Lean is going to help them
- Conferences as echo chambers — where are CEOs and CHROs going to?
- “Our CEO isn't buying in…” — what do you suggest?
- How many CEOs are “Lean Zealots” like Art Byrne??
- Tell us more about your firm Lean Focus –what types of clients do you serve?
- Lean in private equity — What does PE care about?? Vs. Public Equity
- Has there been a shift in the PE philosophy on extracting value vs. creating value, or do some just do it differently / better?
- Tell us about the “Ownership Works Initiative” — KKR and other firms (TPG)
The podcast is sponsored by Stiles Associates, now in their 30th year of business. They are the go-to Lean recruiting firm serving the manufacturing, private equity, and healthcare industries. Learn more.
This podcast is part of the #LeanCommunicators network.
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Automated Transcript (Not Guaranteed to be Defect Free)
Announcer (2s):
Welcome to the Lean Blog Podcast. Visit our website www.leanblog.org. Now here's your host, Mark Graban.
Mark Graban (13s):
Hi, it's Mark Graban. Welcome to the podcast. It's episode 454 for August 17th, 2022. My guest today is Damon Baker. You'll learn more about him in a minute, but he is the founder and CEO of the firm Lean Focus and is also a private equity partner at Coltala Holdings. So if you wanna learn more about Damon and his affiliations and his work and more look for links in the show notes, or you can go to leanblog.org/454. All right. Hi, everybody. Welcome back to the podcast. My guest today is Damon Baker. He is the founder and CEO of the firm Lean Focus. He's also a private equity partner at Coltala Holdings.
Mark Graban (53s):
So Damon has been implementing lean practices in various general manager and VP level capacities for more than 25 years, but it was at Danaher a company. I'm sure a lot of you, or hopefully most of you have heard of where he worked for nine years. It was there to that. His passion for what we might consider to be true business transformation was really born. So he was instrumental in developing Danaher's companywide problem solving process. He was inspired to create a new comprehensive business system that enables organizations to improve on all fronts. So Damon has worked in a Shingo-prize winning facility. He's a Shingo Prize examiner and over his career, Damon's demonstrated hands on leadership and facilitation of more than 500 Kaizen events in almost a hundred major corporations in 16 different countries.
Mark Graban (1m 40s):
So with all that I know we're gonna have a great conversation here today. Damon, how are you?
Damon Baker (1m 46s):
Great, Mark. How are you doing?
Mark Graban (1m 49s):
I'm doing well, real excited to, to talk with you today and, and to learn from you. And, you know, before we talk about some of these issues of, you know, what, what is a business system and, and problem solving and things like that. I'll ask you a question for context. I like to ask a lot of my guests, you know, how did you first get introduced to any of this, whether you would frame it as Toyota production system or lean? Like, what was the, what was the context in the circumstances for you?
Damon Baker (2m 15s):
Oh, it's a great question. So my lean history, my lean pedigree, if you will dates back to, I would say around 19 96, 97, somewhere in there, I was two years out of high school and I was working in a factory while going to school at night at a local community college and had instructor that incorporated some lean training into some of his courses. And that peaked my interest. And I was a little bit of a reader at the time. So I was, I had already read like The Goal, but I didn't know that many of the principles inside of it were lean principles.
Damon Baker (2m 59s):
And I really enjoyed that book because it was written more like a narrative, a novel than more of a, a technical manual. So I say that was probably the first thing that got me hooked. And then I learned about Toyota and my night classes. And then I started to, to purchase books about the Toyota production system. In fact, the Taiichi Ohno translated Toyota Production System book was probably my first TPS book that I remember reading and then the back to the cabinet factory. So the cabinet factory was doing, I would say very basic blocking and tackling lean events, you know, five S a little bit of standard work organization flow and things like that.
Damon Baker (3m 42s):
We back then, we didn't have the, the terminology and the jargon and, and many of the world didn't either to know what it was we were doing and how it all fit together, but it just made sense and clicked in my head. And thankfully, I, I started out in a company that was already thinking that way. So maybe to some degree, I was spoiled a little bit, and that I didn't have a bad experience first to, you know, kind of turn me off to, you know, why lean doesn't work. So it was kind of the opposite thing, but from there as just, you know, I, I sought out companies and, and obviously Strat companies with strategies that really embrace this kind of thinking from that point forward, because I was a believer myself, but yeah.
Mark Graban (4m 27s):
And so were your role, were you like frontline team member there in that cabinet factory?
Damon Baker (4m 33s):
So I, no. I started as an hourly associate, so I was building checkout lanes. I was building conveyor belts, building cabinets and things like that. And I was promoted during my time there to be a basically like the shop floor foreman, if you will. So I was like an hourly supervisor. So I led a, a team of probably about 15 to in peak seasonal times, 30 people and building, you know, checkout lanes for stores like Aldi f]\Foods and, and Best Buy and things like that. And yeah, I mean, we, we, we got to design our workforce and kinda the cool thing about it was it wasn't continuous manufacturing. Like you could imagine the products going down on assembly line today, so it's very project oriented.
Damon Baker (5m 18s):
So you had to set up each project efficiently in order to do it well, and then tear it down and then run another project, set it up efficiently to do it well. And then you may go back to that other project, or you may not. So a lot of times you got one chance to sort of set up this efficient flow and, and run it that way. And that's, that's where we started incorporating a lot of these, these principles, tools and techniques.
Mark Graban (5m 40s):
Yeah. Well, it was great to hear that you, I mean, you know, as you, I think you said you didn't have a bad experience, but I think that's part of our goal is to help people have good experiences with lean. Like I'm reminded one time I had chance talk, not on this podcast, but Jamie Bonini, you know, Toyota and the TSSC group, he said, pretty bluntly. I think he said this at the conference, that if you, if you are implementing lean or TPS in a company and the employees or unhappy you're, that's not really TPS.
Damon Baker (6m 12s):
Yeah.
Mark Graban (6m 12s):
So, you know what I mean? Like, what were the benefits that, that you saw, or maybe more broadly, like, we want lean to be a good experience for production associates, supervisors? What, what does that mean to them?
Damon Baker (6m 25s):
Yeah. You know, I, I don't think I had that pretty typical experience where somebody from the outside or from another layer of leadership came down and told us how, what we were doing was wrong and that we needed to do it in a new way. So I, I liken it to like Mark, Mark goes out to dinner with his, with his spouse. And then when he comes home, we rearrange his kitchen and we're very proud to show Mark the new layout. And don't you love this, isn't this fantastic. We use lean principles. We did a Kaiser and it's great. Right. You're like, get outta here before I call the police. So I mean, a lot of, yeah, a lot. I mean, a lot of Kaizen happens that way. It's, it's two people versus with and four people.
Damon Baker (7m 8s):
So we really miss out on that respect for the individual. That's so key in what makes this, this go and be successful. So did I experience that later in my career? Absolutely. I was on the receiving end of it. And I was on the giving end of it. To be honest, you know, you, you learn through mistakes, but you know, you kind of, that is one of the core principles that you just need to keep with you for the rest of your life. And it's just remember, it's like, all of us are all for change until the changes are change.
Mark Graban (7m 40s):
Right.
Damon Baker (7m 41s):
Yeah. Right.
Mark Graban (7m 42s):
Yeah. I mean, that's, that's the key, you know, engaging people, like you said, and a lot of people say, are we doing it to them for them, or with them like doing it for them might be well intended, but still not engaging them.
Damon Baker (7m 54s):
Yeah. You
Mark Graban (7m 55s):
Know, and that's, that's, that's not the most respectful or the most effective way to, to go about any of this change. Right.
Damon Baker (8m 3s):
Hundred percent. Yeah.
Mark Graban (8m 5s):
I mean, so going, going back to books and thinking about your starting point, you could do a lot worse than a Taiichi Ono book is a, is a starting point, you know, and there's imagine, I think a lot of people who maybe don't get exposed to that, they don't pick it up. There are so many books. If you go search Amazon for book about lean, you probably wouldn't find The Goal coming up as a search result. They may may show up in that strip of like people also bought. And we can talk about that maybe, but there's a lot, I mean, there are a lot of random, generic Lean Six Sigma books that I think would be an awful introduction to lean
Damon Baker (8m 46s):
Agreed. And, and I think I've read a lot of them. So, so at some point, like you start, you get like 10 pages deep and you're like, I'm done, you know, it because, you know, philosophically, you disagree or it's, it's just a repackaging of something that was done years, you know, before, but, you know, there's, there's some ones that really stuck with me and you, I don't wanna make the, the whole podcast about like, you know, our book list, but the, the one that really stuck with me that I felt like I, I read it and I could go do some damage in a good way was Gemba Kaizen. And, and it was just like, and I think I, I got, I think I picked that up at H&I Corporation as part of the onboarding.
Damon Baker (9m 32s):
Everybody got a copy. And I remember just paging through that thing. I had the highlighter, I had dog eared the pages all over sticks out in my mind.
Mark Graban (9m 51s):
There's a second updated edition of that book that came out couple years ago. He's still active in working and traveling the world and still writing. So again, like, you know, there's that more direct lineage from Masaaki Imai who translated for Taiichi, learned from Taiichi, you know, he wasn't a direct Toyota insider, but he was very close. And, you know, there's that question. Let me ask a, you know, kind of a question related to that, like, when you look at different candidates for a job, or, you know, how, how, how do you look at, like, what are different dimensions that you look at, or somebody should look at in terms of lineage, where have they worked?
Mark Graban (10m 36s):
What, what have they read? Who have they learned from how, how important are those things?
Damon Baker (10m 40s):
Yeah. I mean, they definitely are important, but I think what you can't be is a, is a lazy recruiter and a lazy interviewer. And I think even our, in our recruiting practice, which is a big part of what we do, sometimes prospective clients will say something like, just find me, somebody from XYZ company that knows how to do the XYZ business system. And just because somebody worked at a place does not in any way mean that they're expert at applying those tools. And, and sort of the, the analogy I make is there's, there's really like four personas associated with a business system.
Damon Baker (11m 22s):
So there's there's architects. So if you sat them down, they could take out a sheet of paper and design a business system for a company, looking at that business and who they serve and whether they manufacture or their service oriented, because they've seen enough of it that they could tailor, make it for you. And they could give you the blueprints for it. So those people are very, very skilled, right? Not a lot of 'em around then there's builders, so they can take the plans, right. And then they can go install that system inside of the company. Right. But the, the plans were not developed by them. So they're more of like the blue color doers and then a level below that are what I call trades people.
Damon Baker (12m 3s):
So thinking, building a house, you've got plumbers, you've got, you know, roofers, you've got electricians, they're specialists. So inside of a business system, you can't be expert at all of these things. You know, some were say, we're expert at the DBS system, that's nonsense because there's, you know, close to a hundred different tools inside of it. So within that toolbox that are specialists, are you a growth oriented practitioner that knows how to do front end continuous improvement tools? Are you Mo more shop floor S QDC focused, right? And then the, the last tier and, and, and these aren't like, yeah, I'm not saying that one's positive or negative one.
Damon Baker (12m 45s):
Another is kind of the way it is. Are, are the homeowners, the people who use the house, right? So inside of a company, there are people who use the system, but they couldn't facilitate teach, install, or architect any of it. So when we interview people, we're trying to figure that out, like, who are you? And you can be several, depending on your career trajectory and where, what you've done and the things that you've accomplished. But that's what we really try to tease out of people just because you've been at some great place. That's well known. You gotta dig a layer deeper. So it's, I think that more as like it's table stakes to get people into the, the, the conversation, then you dig deeper into that, but then you look at some resumes and you go, well, geez, they've never been at a place.
Damon Baker (13m 33s):
Do I, do I toss it aside? You can make mistakes in that regard too, because you don't know somebody's history. Like how, who did they learn from? What did they read? What experiences did they have? You know, all those kinds of things play into it. So I wish there were some easy way to, to say, it's, it's always these type of people from this place, but there are some, some real hidden gems that you just wouldn't expect by just digging and asking the right questions. So,
Mark Graban (14m 3s):
So to recap, the, the key point in the headline, don't be lazy about it. Do the work.
Damon Baker (14m 8s):
Yeah. Yeah. Hundred percent. Yeah.
Mark Graban (14m 10s):
Yeah. Cause you know, even a company that you might not think of as a, a lean company could have a handful of people that really, you know, deeply embrace different lean philosophies, or it might be hard to find people who, who really embrace that, but it's not a natural fit where they're currently working. Right. So there might be some people then that really get unleashed yeah. By, by, by a different environment and different leadership.
Damon Baker (14m 38s):
Yeah. The way I describe that is, is taking the salt water fish out of the salt water tank and putting 'em in, or, you know, out of the fresh water tank and putting 'em back into the salt water tank. Yeah. Putting 'em in the right environment.
Mark Graban (14m 49s):
Yeah. Yeah. Well, I was gonna make a different Phish analogy. If you talk about somebody who's only worked at, let's say Toyota or only worked in a Danaher business, it was a, a mature Danaher business system company. What's the, the, the old expression that the fish couldn't, I mean, fish can't talk, but the fish couldn't explain the water that's in the bowl around them. It's just, it is right. Yeah. It's just, they take it for granted. It sustains them, it's it. But how would you explain that to a dog?
Damon Baker (15m 19s):
Yeah. It's, it's an interesting feedback. We, we did try to recruit some people from Toyota within Danaher, and this is in no means a slight against these people or Toyota or their experience, anything like that. But they came in and they were trying to implement a version of TPS and, and, you know, we really had 40 different companies inside of Danaher that were completely different product lines and markets and customers and things like that. So you couldn't take a version of TPS for automotive and come in and copy and paste it. And when it didn't work, it's like, what do you fall back on? If that was your experience? So you didn't have all the repetitions looking at all these different situations of applying these concepts and tools.
Damon Baker (16m 4s):
So they were like a fish outta water. So I think probably they were in a friendly environment, culturally, like problem solving and support from leadership and things like that. But when they would run into an impasse and it's like, geez, well that that's, that is different than I've seen. I don't know what to do next. And you know, the machine sort of start smoking.
Mark Graban (16m 23s):
So yeah. Yeah. So we come back to this one a minute. The, the, the difference, the two letters that are different between TPS and DBS but before getting into that, I mean, the other thing you, you made me think of was, you know, you talk about starting your career there, there's learning, right. There's learning lean, or however you're gonna frame it. Somebody comes right outta college until let's say a, a Danaher business, or some other company there's a lot to learn. There's less to unlearn. I remember, you know, in general motors, I started my career there in 1995. I was young and impressionable and was ready to learn from the people there with TPS backgrounds.
Mark Graban (17m 4s):
That's a totally different perspective than someone who has spent 35 years, not only working in, but succeeding professionally in the old environment. Like at some point, I don't know where you reach a point where it impossible to unlearn certain things and that, and that's what we're dealing with, you know, across different organizations, different industries, different leaders. I'm curious to hear more of your thoughts on that. Like, you know, learning it to begin with versus trying to help someone unlearn it.
Damon Baker (17m 32s):
Yeah. You know, it's, it's funny as, as pro change and as pro improvement as lean consultants to say that they are, and, and that their client should be, we are probably the most rigid and inflexible people in the world. Right. You know, if somebody puts out something new in the lean community, or the first thing we do is say like it's garbage and, you know, you should be doing it the old way or that kind thing. So, yeah, we're, we're less, less willing to explore new ideas and, and is, that's not a phenomenon unique to lean practitioners. That's just humanity in, in general.
Damon Baker (18m 13s):
Sure. It's like the longer we're on this planet, the more we think we know and mastered. And it's, you know, I think the first battle you win every day is with yourself and recognizing that I haven't seen or learned or mastered everything. And how do I approach what I do with this beginner's mindset all the time. Now, you know, it's a little danger of doing that and consulting, cause you don't show up with the client and go like, well, I don't know, what do you, you know, it's like, let's figure this out together. It's like, well, why did I hire you then? Yeah.
Mark Graban (18m 44s):
So,
Damon Baker (18m 45s):
So it's a balance. But I think, you know, even, you know, I'm 25 plus years into this and it's like every single time I teach something, facilitate something, I take something new away and, and maybe it's not a technical feature of it, but it's maybe a better way to deal with a people situation or how to get followership or, you know, something it's are you continually reflecting on the way you do it? And could you be doing it better? That point forward that's to me, the spirit of the culture we're trying to build in the company, isn't it like every day, a little, a little better.
Damon Baker (19m 25s):
And, well, the company's an inanimate object. If the people inside of it, don't subscribe to that, then the company can never subscribe to that because it's just the sum of the total parts. So how do you find people in your organization that truly approach the world that way they're out there? There's a lot of 'em out there to be quite honest. And when you surround yourself with a lot of those kinds of people in the company, it's pretty powerful stuff. Cause egos wash away your willingness to entertain new ideas and thoughts, you know, open up all those kinds of things. It's when you think you've mastered the universe, that's in trouble, you know, you, you start thinking we have no problems, we figured it all out.
Damon Baker (20m 7s):
So we could probably make another podcast of companies that business because of the culture from the top that really espoused that belief.
Mark Graban (20m 16s):
Yeah. Yeah. And then those are some really powerful points and it can be a struggle sometimes to try to find balance. Right. So, you know, I think people in more recent years, you know, if we were trying to coach problem solving and people talk about, you know, leading by asking questions, don't give people answers. Yeah. But then to your point, if you take that to an extreme, you might get thrown out the door as a consultant, or I think I I'm, I don't know if I take credit for this is my Friday afternoon brain can't help it. You know, the old joke about, you know, the client asks the consultant, what time it is. And the consultant says, Hey, let me borrow your watch. Yeah. Something like that.
Mark Graban (20m 56s):
Right? Yep. So maybe the extension of that is a lean consultant would ask, what problem are you trying to solve by knowing what time it is or something obnoxious like that? I dunno, but we have to be careful.
Damon Baker (21m 8s):
Huh? Yeah. I, I think the, the danger is in following anything exactly to the letter, which is also a contradiction and a paradox to what we teach, which is follow the standard. So when you follow the standard, sometimes that replaces thought, right? So you don't so well, you know, you go into a situation, an airline counter and it says, well, here's how I'm supposed to respond to the situation. And, and you forget that there's a human being in front of use common sense. And from time to time to figure things out and maybe right decision, regardless of what the playbook says. So, you know, things like I should use the Socratic method each and every time I'm, you know, practicing lean I think is, is not doing the world any justice.
Damon Baker (21m 58s):
It's like, do, do we really want to ask the, the force behind us? Like, Hey, do you think we should charge that hill? Is this a good idea? You know, as bombs are flying. Yeah. I dunno. What do you think let's talk about it. Let's do a hae session. So sometimes you have to make decisive decision.
Mark Graban (22m 16s):
Well, there, there, there might be a balance and I, I don't have any experience in the, the military, but I think of general McChrystal's book, team of teams and talking about commander's intent. So maybe there's balance to be found if a leader says, or even a consultant says, we need to do this. And here's why now let's figure out together how to do it. Yeah. Yeah. I think that can be, you know, a helpful balance maybe
Damon Baker (22m 38s):
For sure. Again. Yeah. Buyin, followership ownership, all those things is what you're after is when you leave, you want them to think it was a good idea and continue that behavior.
Mark Graban (22m 49s):
Yeah. And again, maybe back to something you said earlier, if they're having a good experience with lean, if it's helpful to them, then, then they're more likely to, to go with it and to make it their own and to sustain things. But you know, you, you bring up this important point, you know, about, about standards, like how, how standardized is standardized, you know, like I think of like here's a healthcare environment. You could have standard work, standardized work that says the person at the front desk should promptly greet the person who walks in and do so in a friendly way. Like you don't have to script the exact words. Yeah. Like to think it robotic, you know? So what, what are the important things that, what are the important standards that affect safety or quality or other important dimensions?
Mark Graban (23m 34s):
We, we could figure that out and then it's attributed to Ohno or Imai without standards. There can be no Kaizen, the idea that the standard shouldn't be carved in stone.
Damon Baker (23m 44s):
Yeah. Right. Agree wholeheartedly and creating a mechanism for, for people to elevate and communicate where they think there's an opportunity to the standard, which oftentimes there isn't, it's like, they're just sort of put into a situation where they kind of just have to deal with it, you know, and then, and their voice isn't heard or changes aren't made
Mark Graban (24m 10s):
And then people get discouraged and fall back on, well, this is the way we've always done it here.
Damon Baker (24m 14s):
Yeah.
Mark Graban (24m 15s):
So I wanna come back to that question again, you know, kind of interconnected questions and, and maybe there's an interconnected answer, or you can talk about, you know, one at a time, your choice, but again, the difference between TPS Toyota Production System to Danaher Business System, why the language business system, how is that different or better or more appropriate for Danaher. And then maybe this is an easier one to answer why I call it a Danaher something instead of the Toyota something.
Damon Baker (24m 47s):
Yeah. So I probably wouldn't be doing the Toyota alums, any justice by making an assumption as to what's inside of TPS. Because what I don't know is, you know, you might ask some Toyota people say, look well, TPS is inclusive of ever things that we do outside of the factories as well. If we just happen to call it TPS, cause I've run into some X Toyota people that say, yeah, we do TPS in sales and marketing and we just call it TPS. Like we don't have, you know, it's not the Toyota business system. So, so I won't make any assumptions about what, whether one is more complete over the other. You know, the one I that I can speak to is obviously one I had some experience with.
Damon Baker (25m 28s):
So, you know, the, the origins of it and all this is documented online. So you can read it in books that Art Byrne and, and George Koenigsaecker have written and Mark Deloseio from Lean Horizons has posted about. So it started off as the Danaher Production System in, in the late eighties, early nineties with Jacobs vehicle system, which was the first place they did the, the first lean conversion with, with the group, from Shingijitsu with Nakao. So, so it was referred to as the Danaher Production System then, because they didn't know of know of any other ways that this could apply outside of the four walls of a factory.
Damon Baker (26m 11s):
So it was a very production oriented thing, right? So it was, it was over time that it became the business system when they started to understand concepts like strategy deployment or hoshink kanbri, we called it policy deployment at, at Danaher. And then we started making acquisitions like Fluke, which was one of the acquisitions, I think, early 2000, which, which Larry Culp actually was the president of for a while. And they brought with them as part of the acquisition, a lot of different commercial front end tools that they were using, like voice of customer segmentation. Some, some, what we would know today is lean product development tools and would apply to R&D and we're like, wow, well, like they're doing a great job on, on marketing and, and sales and things like that.
Damon Baker (27m 3s):
And, and, and product lifecycle management was another area they were really good at. So then those things got adopted into data production system and then became this collection of tools that could be applied outside of just the functions of operations. Right. And it slowly grew over time. So it's like applying Kaizen to the business system itself. And even to this day, it continues to be evolved and improved and added to, and refined and enhanced. So it is this comprehensive set of interconnected tools and systems. If you think about, you know, P&L and all the people inside of a company, you know, the factory is only this portion of it, right?
Damon Baker (27m 46s):
It's the direct labor it's, you know, the, the COGS and this kind of thing. Well, what about SGNA? What about finance? What about marketing and sales and all these kinds of things there wasn't a toolbox for that. And in most companies there isn't a system for that, or there is, but they don't think of them as being connected, which is right. So it's bringing that all together and, and really viewing all of those seemingly separate functions as interconnected process boxes on a value stream map that need to deliver value to a customer at the end. And how do you compress that over time using these various tools and, and that's really the idea behind it.
Damon Baker (28m 30s):
And I think a lot of companies haven't made that connection, right? Maybe it's because of the jargon and the history and the bad taste that they've had in the past. But when they hear, you know, lean, they, the automatically jump to this is, oh, this is lean manufacturing. This is automotive. This is whatever. So calling something, a business system too, I think gives you a feeling that it's yours. This is our culture, right. It's not just our tools, it's our culture. It's our way of working. It's our values, our systems, our principles. We had a joke that, you know, it was DBS was a noun. It was a verb. It was a, a,
Mark Graban (29m 8s):
Could acquire a company in
Damon Baker (29m 12s):
DBS. It, yeah, exactly. It's what we said. Yeah. So, you know, it just became how we worked, honestly the, of the day. And was that shaped all of the decisions you as a company strategically, so
Mark Graban (29m 25s):
Well, and there's, yeah. There's so many great points you made there back to yeah. What you said earlier, it, it might not be more complete, but maybe calling it business system is just a more fitting name for one organization compared to another, you know, I
Damon Baker (29m 47s):
Think you're hearing the words and you're in sales and, and somebody says, DPS production system. You're like, oh, that doesn't, to me, I'll keep selling where, you know,
Mark Graban (29m 58s):
But it's funny how people, I mean, people like to fixate on how we're different. It started in manufacturing, right. You know, we don't, we don't build cars. What we build is more complex or what we build is a continuous flow of something. Or, you know, then of course it happens in healthcare, but, you know, I, I would've loved, I would love to go back in time. This would be the worst use of a time machine. But to go back to a moment at Toyota, where somebody was trying to explain, let's say judoka and concepts from the loom business,
Damon Baker (30m 29s):
We don't build sewing machines
Mark Graban (30m 31s):
Into Toyota's new car business. And somebody might say, look, we, we don't build looms. These are much more complicated, but they, if, if that ever happened, they got past it. Yeah. And, and, you know, I hope there's an opportunity for others, but, you know, earlier you talked about that first company you worked at not having a bad experience, maybe, you know, a name for something like this in a company like this is a low bar. It shouldn't be off-putting whatever phrase it is. So I, there was some in healthcare who used the phrase “production system,” and I always kind of cringe and think, I don't know if you're really doing yourself any favors. You, you may be wanting to honor the Toyota people you've learned from, but you could call it a care system.
Mark Graban (31m 11s):
You could, there's all kinds of things you could call. You could a management system and operating system.
Damon Baker (31m 17s):
Yeah. There's some common fallacies there too. Like you also hear like, program, like this is our program, which sort of, you know, the, the semantics of that implies that there's a start and end, which, you know, it should obviously have an end.
Mark Graban (31m 33s):
Implementation has the same connotation.
Damon Baker (31m 35s):
Right.
Mark Graban (31m 35s):
So let, so when we talk about words and like, you know, calling something of business system or the, the X company, whatever system like that, that in a way that's internal marketing. So maybe just a bridge to, you know, something you've said, and I wanna hear your thoughts on that. The lean community has a marketing problem. Why is that? And how do you define that problem?
Damon Baker (32m 0s):
Yeah. So at the risk of being controversial, I guess, please
Mark Graban (32m 4s):
Do that's good for,
Damon Baker (32m 6s):
So, you know, we, we interview literally thousands of people a year through our, our search practice. And that's not an overestimation, it's, it's thousands. You interview people, you obviously you're asking questions, understand their breadth of experience and, and will they be able to go in and affect change in an organization and, and implement something that the CEO will, will care about and, and listen to and lean into. Right? So when I, when you launch a product or a service, you are designing that product or service for a customer, what's the problem that this product or service solves, what pain does that customer have today, and how does this product or service solve that pain?
Damon Baker (33m 0s):
And then you design your product service around that, your marketing messaging, and your branding around it, and your selling process all around that. And I think everybody understands that it's like, yeah, that totally makes sense. So a CI person in effect is like selling a product and the product is lean. I'm trying to sell the organization that lean or a business system, whatever terminology you want to use is something we need to be doing as a company. And I have customers inside of my organization that I need to sell that idea to. And in order to do that effectively, I need to understand just like normal customers, what are their pain points?
Damon Baker (33m 41s):
What are their hopes? What are their fears? What are they problems do will this solve and that kind of thing. And then change the delivery of my message based on who that focus group is or who that persona is inside your organization. So I'll give you an example where like, I'm marketing a message you've ever seen this. Like, people send you a spam email, like, Hey, do you wanna buy some staples? And you're like, I don't use any staples. So you just delete those messages. Cause you don't care. It's not solving a problem. So lot of CI people walk into organization and go, we need to create a bunch of black belts, black belts, black belts, black belts. And then they, they advertise that to every level of the organization.
Damon Baker (34m 23s):
It's about black belts, black belts and CEOs going, I care about sustained profitable growth. I care about social responsibility. Like these are what's on the agenda of the CEO and it's gonna be different by CEO, but right. Most of the times sustained profitable growth will be on every CEO's agenda. I mean,
Mark Graban (34m 41s):
Some, some will look for this. Some will look for hitting this quarter's numbers, but you know, I mean, hopefully they're looking for sustained long-term
Damon Baker (34m 47s):
Growth, right? Yeah. So, you know, how do you tailor your messaging to deliver a message that shows how these things help to solve those problems? And it's, it's a hard thing to do if you yourself don't understand the mechanics of what it is that they're trying to do. So P and L understanding when we interview a lot of CI people, this is a huge gap in the CI communities. They, they can't read a P and L they can't tell you how this tool impacts the financials. You know, talk to me about working capital improvement, which tool, which tools in the toolbox would you use to drive working capital improvement in the business.
Damon Baker (35m 27s):
And then it'd say, well, what's working capital improvement. Right? So, so that's what I mean is, and, and, you know, a lot of times it's like these, these conferences and these seminars are like echo chambers, you know, the CI leaders, like, you know, it's not CEOs going there. It's, it's mostly CI professionals going there. And if the messaging in those conferences were aimed at the stakeholder groups that we're trying to drive change through inside of a company, then there may be more of those types of people going. So where are they going? What conferences are CEOs going to, what conferences are near and dear to their heart?
Damon Baker (36m 11s):
And dear
Mark Graban (36m 13s):
Also what podcast listening to
Damon Baker (36m 16s):
Yeah. Are we, listen, hopefully they're listening to this one that
Mark Graban (36m 20s):
More, but you know, who, who, who, who are we reaching? And, and what are we saying? I mean, I think, you know, the same question would, would apply here, but yeah, you're right. I mean, sometimes a conference feels more like a pep rally and everyone's already on the team or, you know, like why a good questions,
Damon Baker (36m 38s):
Like, yeah. It's like, you know, it's an empathy session where we're commiserating with one another about, you know, the challenges we're having in our organization. Meanwhile, the people we're talking about are thousands of miles away.
Mark Graban (36m 47s):
Yeah. Yeah. So let's say you were on stage at a, a conference. You've just given a talk you're on a panel. That's not, you don't like doing that or, or were you just
Damon Baker (36m 58s):
Was imagining that. And I got scared,
Mark Graban (37m 1s):
But so here's a question. I hear a lot of conferences. And I think when I've moderated panels, it always, you know, the form of this question always gets submitted. And I, I, I bet you'll have a insightful, good answer to this. So to that point of commiserating, or, you know, people are say, oh, you know, our CEO, our CEO, isn't interested in lean our CEO, isn't on board, our CEO doesn't buy in. What would, what would your advice be?
Damon Baker (37m 28s):
I answer the same way every single time. And usually they say our, our CEO isn't buying in and I go, what are you selling? It's back to our, our conversation. We just, we just finish up there. It's like, what are you selling? And how are you selling it? Talk to about you, what conversations you've had, you know, how you've delivered that message. And usually that of the, on the, that's doing the commiserating versus the person we're talking. And, and it's a hard bar. Right. And part of that too, is sort of the mindset I had beat into me maybe early on in my life is controllable versus uncontrollable, like control what you can control.
Damon Baker (38m 14s):
Right. And always go back to like, okay, how do I need to change the way that I'm delivering this message so that I can get the right points across and resonate with people. And don't be afraid to ask that person that you're trying to influence. Am I missing the target? And you know, what would help me to get this target, this, this message across to you better now, there's, there's a, there's a point when you've got to also understand when you're hitting the law of diminishing of returns, right? So there are some people in some organizations and I've seen many of them that no amount of great messaging and hitting all the, you know, the points that they care about will make a difference because just they are who they are.
Damon Baker (39m 0s):
And those are situations you should probably remove yourself from or put up with if you so chose.
Mark Graban (39m 6s):
Yeah. Yeah. There's that there. Yeah. There's that choice. And, and back to that point of can somebody unlearn their, their, their knowledge, what they're convinced of their mindsets, their experiences. I think let's say, you know, John Toussaint who had been, you know, a CEO in healthcare was a lean zealot, if you will, and, and, and really drove, you know, culture change. And, and, and, and he, I appreciate the humility where John will tell people, it's like, look, you know, he didn't always think this way. He was a, he had great mentors, people who came like George Koenigsaecker, name that you've already mentioned that John had great mentors, but, you know, I'll give John infinite amount of credit that he was willing to put aside old behaviors, old mindsets, like he changed.
Mark Graban (39m 54s):
He wasn't someone who came in new to healthcare, learning from all these people. And then, okay, well then someday I can apply this as CEO, he had already been CEO, or he'd been CMO, I think he became CEO and then launched all this. But either way, like he showed that ability to change. And like you said, some people don't have that in him.
Damon Baker (40m 12s):
Yeah. And you can, you can usually pick up on it in the first 30 minutes of talking with somebody it's how many questions do they ask of you versus how much talking they do at you? Yeah. Yeah. You know,
Mark Graban (40m 25s):
But I was gonna ask one follow up question, you know, in, in the different ways that you and Lean Focus or in, in private equity interact with different CEOs. I mean, how many, what percentage of CEOs are a quote unquote lean zealot to the order of, let's say an art burn or even aspiring to be that if they're not an art burn.
Damon Baker (40m 47s):
Yeah. It's, you know, it's realistically, it's probably single digits, you know, we're talking Art Byrne, Larry Culp, you know, level of, of engagement. And I think there's a lot of factors at play. One of which you've already mentioned, which is when you take a person who's been successful and they've been rewarded with roles and compensation and adulation and all these kinds of things. And now they've reached the pinnacle they profession, and they're running a publicly traded company. And they're the CEO. There is this tricky thing that happens inside your head is you the, the more, the, the more levels you move up, the, the opposite of what you think would be true happens.
Damon Baker (41m 35s):
You get less feedback from others. The higher you move up in an organization when you're a middle manager, oh my gosh, you've got 17 development plans and 360s going on. But when you're a CEO, people are less willing to come to you and tell you what they think of your performance. And your boss is really the board and shareholders. Right. And they let you hear it. But you know, the tens of thousands employees are oftentimes too afraid to tell you what you need to hear. So if you're not hearing feedback, you, you fill the void in with, well, I must be doing everything great. Therefore I need to keep doing what I'm doing.
Mark Graban (42m 11s):
Yeah. Well, like in, in any business you would say lack of complaints does not mean you're high quality.
Damon Baker (42m 17s):
Yeah. Yeah. Right. So, you know, I think what separates guys like Larry and, and others is no matter what level they've reached in their career, they've never allowed that fatal mistake to happen. They've always grounded themselves. In reality, they've always asked for opinions of, of things and worked collaboratively and have never thought of themselves as being above doing any of the work required at any level. So, so that's, you know, again, we're talking about single digit percent of people as they're special traits of, of people. So yeah. In our practice, you know, it's, it's great when we run into those people, because it makes our lives so much easier and they're the best clients to partner with because you have a true collaborative relationship with those clients.
Damon Baker (43m 8s):
And then, you know, some that are sort of like in the middle, that they are at least on the journey, they're trying to learn, they're trying to do things differently. And then, you know, there's, you know, thankfully we do a pretty good job screening on the front end with, with CEOs to see where their mindset's at. And, and we ask some very pointed, direct questions. Like, you know, this is what it means to be a lean CEO. Are you ready to do these things? X, Y, and Z. And if not, you know, why not? Right. So we're trying to see where their head's at. And there are clients we just don't work with because of, of how that dialogue goes, because we know what that's gonna look like.
Damon Baker (43m 48s):
You know? And it's, it's not that we don't like them. It's just, we're just not a fit for each other. Sure. Not bad. More like a vendor versus a partner.
Mark Graban (43m 58s):
Right. Right. Well, I'm glad you clarified single digit percentage. That's less bleak than a single digit count of them.
Damon Baker (44m 6s):
5% mark, if you, me to 5%, five number out there.
Mark Graban (44m 13s):
Yeah. It's yeah. It's one of those unknowable numbers, but yeah, I'm sure you're, you're directionally. Correct. But you know, art book or art, Art Book, Art Byrne, one of his books. See, I associate him now with the book, I call him Art Book, Art Byrne. One of, of his books was called The Lean Turnaround. And, and that book I think was absolutely intended, you know, for, for CEO readers to tell them like, you know, the more detailed level here's what a lean CEO does. And I would love to find out, I'm sure he would too. Maybe he's gotten feedback. Hopefully how many CEOs or wannabe CEOs have read that book versus lean facilitators and lean consultants and, and, and others.
Mark Graban (44m 55s):
But, you know, he, he took a good swing at, and he continues to share his lessons and his experiences. So always appreciated,
Damon Baker (45m 3s):
You know, it's, it's, it's weird. It's like lean, I like a lot to losing weight. So there's some, some, some analogies here. Right. So if I ask you, mark, how do you lose weight? You know, the answer, right.
Mark Graban (45m 19s):
Gosh, I mean, we know what to do. Right. But you know that, that may yeah. Eat better, eat better, eat less exercise, better exercise, more.
Damon Baker (45m 28s):
It's like two things, right. It's diet and exercise
Mark Graban (45m 30s):
Knowledge doesn't translate into action,
Damon Baker (45m 33s):
Always. So, so there's, you know, if you were to ask everybody in the world, that question, most people would give you the answer. And I think lean is similar in regard, it's like, these are common sense things. And yeah, we know that it makes sense to eliminate waste. And we know that it makes sense to do all these things, but why is it so dang hard because it requires discipline and behavior change and, and commitment and accountability. And those are all things that we suck at in our, our daily lives let alone our business lives. Right. So, you know, there's a type of person that fits a lean culture, and those are a discipline people. Dan, we used to call them, we look for insecure overachievers.
Damon Baker (46m 15s):
That was one of the criteria, you know, find insecure, overachievers or discipline. They continually stretch themselves or driven. They sort of run to problems. They run to pain if you will. But that, you know, it's, it's, it's not the whole world. And therefore the whole world will not be Toyota, you know, because of that fact.
Mark Graban (46m 38s):
Yeah. Not every company in Japan is Toyota. Oh
Damon Baker (46m 42s):
Yeah. That's
Mark Graban (46m 43s):
An important lesson.
Damon Baker (46m 44s):
Yeah. First time I went to Toyota, I was like, oh, I can't wait our to Japan. I can't wait to see all these lean companies in Japan. And we went to all these companies. I'm like what? These were, you know, these were horrible. It's like, you thought this was like lean Nirvana. And it was, it was nothing. It was just like the, the us, you know, you got average companies and above average and a few world class.
Mark Graban (47m 7s):
Yeah. Yeah. And you know, it's hard to generalize and is your experience shows and I've had some opportunity to work in other countries. I think it's, it's less about national culture and it's more about company culture where you can have you, you, you know, Toyota's been successful in other countries just as, as one clear example. I think they weren't sure at first, you know, when they came into America, there was a experiment called NUMMI and they're here to stay.
Damon Baker (47m 35s):
I, I get asked this question from time to time, I'd be curious to hear your response to it. So I I'll get asked, are there certain countries that would have an easier time of doing this? You know, if they're to implement a lean business system way of thinking, are there certain countries because of their society and their norms and their values that adopt this quicker than maybe the us or Germany as an example, how would you answer that question?
Mark Graban (48m 4s):
I don't know. I mean, there's only one country that I've really grown up in and lived in. I mean, it's pretty damn hard to do this in the United States. I mean, is that because of national culture? I mean like rugged individualism, does that cause a problem, but I've seen a lot of companies where you have an amazing team environment, right? So is it a matter of hiring people who share your values and mindset and approach to things? I, I mean, I'm, it sounds like a cop out, but like it's hard to generalize. I mean, what I've learned about Japan is for every reason you could point to of why this would be easier here, they can point to another problem about why it might be more challenging, right?
Mark Graban (48m 50s):
Yeah. You might say like, oh, well go to stores and people who wrap up something that you purchased, they follow such a disciplined routine. Look at that at standard work for that same organization might not encourage Kaizen. Right? So there's this kind, you know, generalizing this Japanese mindset of harmony and, and don't make waves and you might not speak up unless you have a company that really goes out of its way to encourage it. So those are just two things I'd say, well, it's easier because of this general generality and it's harder, you know, because of that. But I really think it's up to the company.
Damon Baker (49m 26s):
Yeah. Yeah. And, and I agree with you and I, I think it makes for interesting, you know, fireside conversation, but, you know, we'll probably never know. And everything that we point to we'll find an exception to, no matter what country we're talking about.
Mark Graban (49m 41s):
Right. Cause again, like Toyota's been successful in many continents, in many different settings and you know, they, you know, so yeah, I think it's, I would rather try to steer people away from that and think about what culture are you building or what culture are you changing? You know, depending on, are you a greenfield or a brownfield? Are you a startup versus a hundred year old company? Right. But yeah, gosh, there are many, many, many things we could talk about if not debate, but you know, I want, wanna ask couple other things for you, Damon, and, and this has been fun. So maybe we can do this again sometime, you know, tell, tell us first, a little bit about Lean Focus.
Mark Graban (50m 24s):
I mean, you mentioned the search part of the business. What are the other things that, that you and the firm
Damon Baker (50m 29s):
Do? Yeah, so we have a, a consulting practice and in the consulting practice, we're using what we refer to as our Lean Focus Business System, the three letter acronym LBS, and it's comprised of a growth toolbox, which is more your front end sales marketing, R and D and so on. And then we have consultants that specialize in that area and they would've been in industry. They would've been people that led those functions or would've led P&Ls inside of companies. So they've been practitioners in that regard and we have more traditional lean consulting practice within that, which these folks would've been VPs of operations, leading plants and factories and so on.
Damon Baker (51m 9s):
There's a lean toolbox. And then we have a leadership practice, which is more people systems. So talent, succession planning, mission, vision, values, performance, appraisal process, organ, talent design, that kind of stuff. And those, those three practices come together when we partner with the client to create really an enterprisewide transformation. So again, we're trying to get away clients away from this idea that lean is this shop floor focused activity, that it's more of an integrated set of tools and systems that work together to drive value creation company. So that's what the consulting practice does. And we've got about 30 people that do that. And then we've got the search practice, which you already mentioned.
Damon Baker (51m 52s):
And for those same clients that we're partnering with on the consulting side, we're, we're uncovering talent needs either because they're vacancies and the company that need to be filled. And when they wanna fill them, they wanna fill them with lean minded talent that can accelerate this rate of change and adoption and culture and things like that. And then we help design new organizations because many of these companies that we're working with don't have the structure of the organization to support this going forward. So we design it and then fill those, those roles all the way from the CEO of the business. We've placed down to manager, director level and everything in between common thread being they've worked in, have experience with and can facilitate and, and drive change using this type of thinking.
Damon Baker (52m 38s):
Then the third part of our business and last part of our business is, is learning solutions. So we'll actually license our tools. So if the company is interested in creating their own business system and they don't wanna spend years and millions of dollars working with subject matter experts to create all this stuff and have it all work together, they can license our stuff. We put their logos on it. And so on. It's a business system out of the box and they can also avoid the intellectual property challenges of, you know, people coming from other places. Oh, when I worked at Toyota, here's what we did. I worked at. And there's too much of that, unfortunately going on around the world or that if legal teams knew about would probably lose sleep.
Damon Baker (53m 20s):
So that's the three parts of what we do. So lean
Mark Graban (53m 23s):
Focus.com is the website, encourage people to, to, to go check out the site, the Lean Focus business. So I gotta pick down Damon that's four letters and you made it or four words and you made it a three letter acronym,
Damon Baker (53m 37s):
Always trying to eliminate waste. Mark.
Mark Graban (53m 40s):
It's like the, the Toyota family changing the name of the company to Toyota. Right? You have some leeway reducing waste and
Damon Baker (53m 48s):
Yeah, there you go. The F is silent. Right?
Mark Graban (53m 53s):
Well, thank you Damon. So, Hey, I'm gonna ask you cuz you know, there are so many things that we, we got in here talked about today. I didn't leave time to really ask you about the private equity work, if you're okay with that. Let's, let's do sometime in episode talking about lean and private equity, the differences, the differences in private equity company approaches. And there's something that you've introduced me to called the ownership works initiative that I, I think if, if it's all with you, let let's, let's do another discussion just about all of that. That's great. Look forward to it, all of that and whatever else we end up gearing into, we can boy, we, I, I, I jotted down, but we, we won't get into, this is something people love debating online, lean versus theory of constraints, Goldratt versus Ohno.
Mark Graban (54m 42s):
It's just a lot of arguing, but we can, we can have differences between lean and Six Sigma. You know, I see that chart on everybody's LinkedIn. And a lot of that is back to the point of what I'll call the bad lean Six Sigma books, you know, or it's a bad introduction to lean when they say here's final question gets your reaction to this. When people say lean is all about speed and Six Sigma is for quality that's…
Damon Baker:
it's nonsense.
That's all it needs to be said. So Damon Baker has been our guest again here today. Damon, thank you so much for, for being a guest. It's been a lot of fun. Great to hear your insights and your stories and a lot of great stuff here today.
Mark Graban (55m 24s):
Thanks again.
Damon Baker (55m 25s):
Thank you, Mark. Look forward to it again. Take care.
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