Hosted by CIRAS: The Iowa Lean Consortium

The Role of Leadership in creating a Lean Culture

Mike Hoseus Author, President, Lean Culture Enterprises

Executive Director, Center for Quality People & Organizations (CQPO)

mike.hoseus@gmail.com or 859-699-2235

Ice Breaker Exercise

• X-Y Exercise

Typical Approaches to Lean

3

Tools Focus

5S

Kanban

TPM

Heijunka

Kaizens

Cells

Teams

“System” Focus

“Company X”

Production

System

Lean Six Sigma

Subjective Assessments,

Complicated Graphics,

Corporate Staff Driven

Why do We Need the Tools?

Lean tools were invented to help people analyze their own work processes, to help them learn how to see the waste (Muda) themselves so they can improve their work.

Lean tools on their own don’t create lean culture!

Lean Tools

4

If Lean Tools don’t Create the Lean Culture…

…What does?

5

Three Levels of Culture

.

Artifacts &

Behavior

Norms &

Values

Underlying Assumptions

What we see, what a newcomer, visitor or

consultant would notice (e.g., dress,

organization charts, physical layout, degree and

formality, logos, and mission statement.

What they say, What we would be

told is the reason things are the way they

are and should be. Company philosophy,

norms and justifications.

What they deeply believe in &

act on Unconscious, taken for granted

beliefs about the organization and its

work/purpose, about people, rewards etc.

Based on Edgar Schein, “Coming to a new awareness of organizational culture,” pp. 375-390 in J.B. Lau and A.B.

Shani, Behavior in Organizations, Irwin, 1988

Lean Transformation Not Lean Implementation with tool focus

System focused journey across the

enterprise

Develops all employees as problem

solvers

Competitive advantage

Bottom line profits

Mutual long term prosperity

for all stakeholders

“These (concepts) are things companies (people) do not normally do. It’s difficult to live the Toyota way of production.”

Fujio Cho, Chairman of Toyota

9

Broader Definition of Lean

• Way of thinking

• Systematic—“Systems Thinking”

– Connecting…

• the Production System with…

• the Human System creates…

…a Total Business System

10

Purpose

Vision/Values

True North

(Employee) Line of Sight

Strategy Formulation & deployment)

Process People

Core Putting people before products

Engaging, Involving

Challenging & Coaching

Teamwork

Lean Organization

Horizontal flow of value

at the pull of the customer

Workplace Management through

standardization & Visualization

Relentless elimination of waste,

overburden and unevenness

Lean Tools

Capability to ID & Solve Problems

PDCA Thinking

How do we Think as a Company?

Problem solving should be an essential part of an organization’s culture, from plant presidents to office work to manufacturing floor team members.

Members should be aligning their daily work with the indicators of the Organization, those are:

Quality, Safety, Productivity, Cost, and HR-T&D

"Tell me and I will forget, show me and I might remember, involve me and I will understand." - Confucius

11

12

Process People

Core

Capability to ID & Solve Problems

PDCA Thinking

Putting people before products

Engaging, Involving

Challenging & Coaching

Teamwork

Defining the Purpose

Horizontal flow of value

at the pull of the customer

Workplace Management through

standardization & Visualization

Relentless elimination of waste,

overburden and unevenness

Lean Tools

PURPOSE

Vision/Values

True North

(Employee) Line of Sight

Strategy Formulation & deployment)

13

Horizontal Versus Vertical

• Lean management places the horizontal flow of value in the foreground:

Lean managers think horizontally, with the help of value stream leaders. However…

Functions are still strong (or even stronger):

– Repositories of deep technical knowledge

– Home base for employees

– Guardians of career paths

14

Suppliers Sales Marketing/

R&D Supply Chain

Human Resources

Finance IT Customers

Growing the Business

Fulfilling Customer Orders

Growing and Developing People, Leaders

Selling, market building

Ideation, product development and launch

Business development and alliances

Order to delivery

Buy – make – ship

Procurement and supplier development

Human resources management

Training and development

Learning and problem solving

Big

horizonta

l busin

ess p

rocesses

Value and work flows across functions

Most important problems are

cross-functional

Customer Focus

• Value added is always determined from the customer’s

perspective - Who is the customer?

• Every process should be focusing on adding value to the customer

• Anything that does not add value is waste

• Some non-value added activity is necessary waste

Which one describes your Company?

Vertical

• Focus - Production

• Budgets, SOP’s

• Make the numbers

• Leaders separated from the work

• People’s ingenuity used to “beat the system”

• Supervisors “manage” people

Horizontal

• Focus - Process

• Purpose

• Make problems visible

• Leaders focusing on the work

• People’s ingenuity used to “improve the system”

• Supervisors work with the people to solve problems

True North

• Purpose, Philosophy and Beliefs

• Values

• Vision

• Big Picture Goals

Profit

Long Term

Success

Contribute to

Economy

Contribute to

Society

Good Quality

Long Term

Mutual

Prosperity

A Paycheck

Growth

Good Benefits

A Safe

Workplace

Meaningful

Work

Company Goals Employee Goals

Mutual Trust

Purpose

Respect

Partnership

A Partnership between an Organization & its Employees

Mutual Trust

Continuous

Improvement

Organization provides Stable Employment &

Sustains or Improves Working Conditions

Employees Contribute Efforts to Realize

Company Objectives

Organizational

Prosperity is

achieved

through

Continuous

Improvement

Employees

Satisfaction is

experienced

through the

Continuous

Improvement

Process

・ This process is good. Because defect ratio is about 0.01%…

・ Achievement of defect ratio equals good quality ?

Thinking just from Company Perspective.

Quality to Who?

Intention of

Customer First / Quality First

Quality is to Customers It’s necessary to consider/judge from Customer perspective.

・ Customer Expectation = always moving, variation.

・ Quality ≠Toyota STD Quality = Customer Expectation

・ Cost ＆ Productivity is for Company.

Quality Cost Productivity

Good

High

Quality

High

Cost

Low

Amount Bad

Strong Point of Toyota:

Able to produce Best Quality Vehicle,

at lower Cost, in Timely manner.

Assure Quality First,

Carry out the Lowest Cost/Highest Productivity

◎ Highest

Productivity Lowest

Cost

Quality vs. Cost/Productivity

Alignment of Values

Society

Economy

Company

Group

Self

Applicability of Values to Key Stakeholders

• Customer

• Employee

• Owners/Investors

• Suppliers

• Community

• Competitors

Benchmark-Toyota Way The Toyota

Way 2001 is an

ideal, a

standard and a

guiding beacon

for the people

of the global

Toyota

organization.

It expresses

the beliefs and

values shared

by all of us.

25

It Starts with

Values Values

Beliefs

Thoughts

Actions

Habits

Character

Culture

Toyota

Way

TBP

8 Steps

Goals for

the

company

Servant Leadership Leadership develops the capacity that allows team members

to improve what needs to be done

Suppliers – Team Members - Customers

Team Members

Group Leaders

Asst. Manager/Manager

Asst/General Manager

Vice President

President

27

People

Core

Capability to ID & Solve Problems

PDCA Thinking

Putting people before products

Engaging, Involving

Challenging & Coaching

Teamwork

Building the Lean Process

PURPOSE

Vision/Values

True North

(Employee) Line of Sight

Strategy Formulation & deployment)

Process

• Horizontal flow of value at the pull of the customer

• Workplace Management through standardization & Visualization

• Relentless elimination of waste, • overburden and unevenness • Lean Tools

Safety Quality Productivity Cost HR

Make problems &

opportunities for kaizen visible.

Standardized Work, 5-S

Visual Control (Andon, Line-stop, Visual Management)

Problem Solving

PD

CA

Standardized Work, 5-S Standardized Work, 5-S

Visual Control & Management

Set up

Standard

Check

Abnormality

Kaizen

Grasp the situation

Purpose of plan

(start of year)

Plan: Goals,

strategies, and

activities

External and Internal

environment at year-end

SWOT

Adjust Plan

Check Do

Company business priorities

(measures)

Department goals for

coming year

New needs and expectations of

team

Reflection: What

actually happened?

Shortfalls in previous outcomes

and activities

Manager grasps

situation and prioritizes

needs of team

Goals and strategy for coming year

Data “Crunching”

Storytelling

True North

Lean Management Hoshin Thinking Process

Adapted from “Getting the right things done” Pascal Dennis

Hoshin Kanri Process

Roadmap — Start by knowing the

destination

Hoshin

Kanri

Everyone

knows the

destination!! 2010 Manager Annual Plans

2010 Plant Annual Plan

2010 Annual Policy & Objectives

Mid-Range Plan

True North: Ideal

Comparison between MBO and Hoshin Kanri

Management by Objectives Hoshin Kanri

Results Oriented

Evaluation of Effort

Concerned with both Results

and Process of getting those

Results

Top down

Communication

Top down Direction Setting

and Bottom-up flow of

Information and means

Directive Participative

Primarily Authority

Oriented

Primarily Responsibility

Oriented

33

Destination

(Vision)

Starting Point

(Current Condition)

The Strategic Plan is

the “Road” to a Desired

Future State of the Organization

Use Hoshin to

remove the Big

Boulders, one at a Time

Hoshin Roadmap

Use Continuous Improvement

to remove small obstacles

on an ongoing basis

Later

Later

Function Hoshin

Division Hoshin

Department Hoshin

Individual Priority Themes OJD

P/S

Horizontal Alignment

Vertical A

lign

men

t

Company

Hoshin

Hoshin Kanri = Direction Management

Lean Leader Model Based on Liker, The Toyota Way

Bottom-Up

Development

Top-Down

Directive

General Management

Expertise

In-Depth Understanding of

Work

Group

Facilitator

“ You’re

empowered”

Builder of Learning

Organizations

“Here is our purpose and

direction. I will guide and

coach”

Bureaucratic

Manager

“Follow the Rules”

Task Master

“Here is what to do and

how—do it”

Principal Roles – For ALL “The Lean Management System”

1. Go and See: Understand the real situation, the real process, from the real people who

work it, at the real place of action.

2. Define Normal Conditions Is the Current Condition (ab)Normal? Prove it.

Can you define (ab)Normal? Write it.

Can you SEE (ab)Normal? Visual Management

When is it (ab)Normal? Tracking Metrics

3. Solve a Problem Teach the METHOD for Problem Solving – get involvement.

Implement Solutions / Permanent counter measures.

4. Sustain and Nurture the Processes/People

Human

Resources

INPUTS

Assessment

Quality

People

OUTPUTS

Quality

Organization

LEAN CULTURE OVERVIEW MODEL

ENGAGE DEVELOP ATTRACT ENROLL

ORGANIZATIONAL

STRUCTURE &

SYSTEMS

ORGANIZATIONAL

LEADERSHIP &

ENVIRONMENT

♥ Determine organizational competencies

♥ Use demonstration of competencies to link hiring, training, evaluation, promotion, recognition and promotion

♥ Ensure fair and consistent policies

♥ System of “checks and balances”

♥ System of “CA-PDCA” culture

Role of HR “The keeper of the values”

Identifying Lean Core Competencies

Thinking and Operational Abilities

Grasp the Situation

Problem Solving

Process Management

Company Business Perspective

Development

Operational and Technical Skills

Identifying Lean Core Competencies

Leadership & Teamwork Abilities

Coordinate and Communicate

Collaborate and Cooperate

Initiate and Influence

Build and Maintain Relationships

Hiring

Flowchart

On-Site

Testing

EZ App® Recruiting

Behavioral

Interviewing

Job Offer

Health Screen

Background Check

Sample TMMK New Hire Training Program

*PDCA

*A-3

*Problem Solving

2008 2010

Skills/Pay

Overview:

Start 4/3/2006

OJT/Production Experience

2 years

Ready

to Hire *Safety

*Values

*TPS

*Teamwork

*STW *QC Tools

*Meeting

Facilitation *STW

*External Hire *Catch-up

*STW II.

*KPIÕs

*Visual. Control

*Ergonomics

*Two Way

Communicat.

*Process

Diagnostics

*Conflict Resolution

PHASE II:

TMMK New Hire

PHASE I: New Hire

or Temporary

$$

$

Each Step:

Plan= Classroom

Training

Do= OJT/

Homework

Check= Assess./

Evaluation

Action=Extend

Assignment

5 years

*Business

Direction *STW III

*Final

Problem

Solving

Demonstration

$$$

2013

Grow-in

Complete

Step-by-Step Progression to Stable Job

Performance

ID Fundamental Skills

for a Class of jobs

Job Breakdown to Work

Elements for Specific Job

Use Toyota Job Instruct ion

(TJI) to Train Associate

Train in Fundamental Skills off

of Line (GPC)

Follow-up & Support

unt il Masters Job

Continuously

Improve Job & Job Instruction

Off-Line Skills Training

On-Job- Development

Example Video Manual

Example Simulated Jobs

Learning Example: Look at each list the same amount of time

• ocean/breeze

• leaf/tree

• sweet/sour

• movie/actress

• gasoline/engine

• high school/college

• turkey/stuffing

• fruit/vegetable

• chair couch

• bread/b_tter

• music/l_rics

• sh_e/sock

• phone/bo_k

• chi_s/salsa

• pen_il/paper

• river/b_at

• be_r/wine

• l_nch/dinner

Lean Management is Different Solution How to Develop Solution

Lean’s Management System

Leaves up to the team member

Specifies

Traditional Management System

Specifies Leaves up to the member

In order to practice, we need to know what to practice

and this is why Lean Leaders must specify the pattern

that they want practiced.

• Reduce variability, increase predictability

• Enhance repeatability, confidence, consistency

• Clarify procedures

• Enhance communication

• Improve Problem Solving

• Set good discipline

• Develop awareness

• Establish “Problem Consciousness”

• Establish a basis for education and training

• Establish a baseline for performance

• Improve Quality, Safety, Delivery, Cost

• Provide the basis for Improvement

THE OBJECTIVES OF

STANDARDIZATION

How to Implement Standardization

Process

Improvement /

Standardization

Environment

Change

Problem

Occurrence

1. Clarify Job Expectations / Goals

(Clarify customer expectations)

2. Visualize and break down Standardized

work into Major steps

(Visualize process into manageable steps)

3. Verify necessary conditions

(Inputs, tools, parts, capability for each

work element)

4. Clarify process criteria

(clear specifications for each work

element)

Document and

Share

(Supervisor, staff

and

Related divisions)

5. Implement and Monitor

(Confirm major steps meet process

criteria)

4B.

5B.

6.

Toyota Continuous Improvement Culture

Work Teams

Create Initial Standards

Learning from

Past Problems

Work Teams Work

to Standard and

Detect Deviations

From Standards

Work Teams

Contain

Disruptions to

Production

Work Team Root

Cause Problem

Solving

Improves Standards

Broader Problem

Solving to Level Up

System

Continuous

Improvement

Underlying Assumption: Human and Technical Processes are interrelated and dynamic so initial

designs are only a rough starting point which must be continuously improved by every team member.

Results: High levels of engagement at all levels in the actual process leads to continuous

strengthening of the system and high congruence between expectations and reality.

Step 1: PREPARE

WORKER

Step 4: FOLLOW UP

Step 3: TRY OUT

PERFORMANCE

Step 2: PRESENT

OPERATION

Plan

Do Check

Action

Major Steps

Key Points

Reasons

The Four Steps of JI

52

Typical Flexibility Chart Author:

J. Smith

Proces

s

Nr.

1 2 3 4 5 6 7 8 9 10 11 12Number

of

processeTarget (M an/Job)

Sectionnr. 10 A

Teamnr.: 1

Date: 6/98

J

O

B

N

A

M

E AS

SE

MB

LY

INS

PE

CT

ION

TO

E I

N

AD

JU

ST

ME

NT

HE

AD

LIG

HT

AD

JU

ST

ME

NT

RO

LL T

ES

T

BR

AK

E T

ES

T

EM

ISS

ION

TE

ST

FIN

AL D

RE

SS

CH

EC

K T

ES

T

WA

TE

R L

EA

K T

ES

T

DV

T

1M2J %1M2J

Name & Position PlanAct

John Jones 3 2 50%

Joe Bates 3 2

Wendy Smith 2 2

Geoff Smith 2 1

Tom King 3 2

George Whiteside 1 1

Danny Nelson 1 1

Tony Abila 1 0

Ken Anderson 1 1

John Smith (TL) 9 6Number of people

per process Plan 4 3 3 3 2 1 2 2 2

Act 3 3 3 4 2 1 0 0 2

Target (Job/Man) 1J2M

Target % 1J2M 66%

EVALUATION Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Group leader

Section manager

Department manager

GMIO Standard Form (flexchar.xls)

A. In this section write your name, section number, team number and the date the chart was produced.

This serves to clarify who drew up the flexibility chart, identify your workplace� and the appropriate time period.

B. In this section write the name of the job as performed in your team.

C.Planned Number of Jobs per Person vs. Actual

D.Current Target (this is a plant-set target) In this example 1M2J is required for full rotational capability.

E. Enter the names of the team members of your team.

F. The percentage of members of the team who have achieved the target

= Knows steps (in training)

= Can perform job to quality and

safety but not in takt

= Can perform job to quality, safety in

takt without supervision

= Can Train Job to job inst std

= Is authorised to do repairs

AB

C

D

E

F

G

H

# %

Jobs O

pe

rato

r N

am

es

Plan vs.

Actual Monthly

Evaluation

Manager Level

Focus on Shop Floor and

Systems Improvement.

Tools: Visual Factory & TBP

TBP

Team Leader and Group Leader

Manage Standardized Work, Process

Improvement and Develop Problem Solving Skills . Tools: FMDS, TBP & OJD

Team Me mber

Focus on Fundamental Skills & Standardized Work

Tools: Skills Training, Job Instruction, Standardized Work and 5-S

General Manager and VP Level Business Planning and Policy

Deployment Tools: Hoshin Planning

& Toyota Business Pract ices (TBP)

Toyota Training and Development

PDCA in our Daily Work

P

D C

A GtS

Business Planning

Project Management

Problem Solving/Kaizen

Daily Work

A-3 Report

A-3 Action Plans-Master Schedule

Hoshin Kanri

Problem Solving at all Levels

•Policies

•Annual

Objectives

•Improvement

Plans

•Cross

Organizational

Problem

Solving

•Process

Improvement

•Objectives

& Budget

Management

•Management

Directed

Kaizen

•Daily Problem

Solving

•Standardized

Work

•Kaizen

•5S

Supervisors &

Team Leaders

Operators

Top Management

Plant Manager

& Manager

Goal

•Problem Solving that

results in getting to the

goal.

Three Stages of Problem Solving

New Goal

“Reaching”

“Maintaining” “Raising”

•Problem Solving that

focuses on maintaining

the goal.

•Problem Solving

that focuses on

increasing capability

beyond the goal -

“Kaizen”.

Maintenance Kaizen Kaizen

Linking the 8 Steps with Drive & Dedication and PDCA

1. Clarify the Problem

2. Break Down the Problem

3. Target Setting

4. Root Cause Analysis

5. Develop Countermeasures

6. See Countermeasures Through

7. Monitor Both Results and Process

8. Standardize Successful Processes

A

C

D

P

Concrete Actions and Processes

Customer First

Always Confirm the

Purpose of Your Work

Ownership and

Responsibility

Visualization (MIERUKA)

Judgment Based on Facts

Think and Act Persistently

Speedy Action in a Timely

Manner

Follow Each Process with

Sincerity and Commitment

Thorough Communication

Involve All Stakeholders

Drive and Dedication

10/14/2011

What is an A3 ?

• Core Communication Tool at Toyota

Reporting

Informing

Consulting

59

Establish clarity and alignment to purpose- A3 thinking and management

Keys to effective A3:1. Does the A3 tell a problem solving story, using both words and visuals?

2. Is the importance to the business and/or customer evident?

3. Has the current condition been observed directly and understood?

4. Is the A3 being discussed with colleagues, stakeholders, people involved in the process?

5. Has the problem been broken-down and analyzed to root causes using facts and data?

6. Do the countermeasures and actions address the identified root causes?

7. Have success measures been established?

Understanding Agreement Alignment

A3 Thinking and ManagementFostering

effective dialogue

Encouraginginitiative

Developingproblem solvers

Enabling effective execution

Office Products North America

Strategy Objective: Realize new revenue streams via alliances, experiments and exisiting capabilities

Value Stream or Major Process:

Strategy Deployment Leader: Allison Phillips Updated: 12/02/200812/11/2008

V. The target condition - What will the improved state look like?

Problem Statement - What is the gap?: We will have a steady stream of EBIT available to help fund growth initiatives

Marketing, R&D, SFC & GBD project spend has declined at a CAGR of X.X% over the past 5 years - down $X.XMM in last 12 months We will have new partnerships that extend Avery's consumer reach and

Net Sales has declined at a CAGR of -X.X% over the past 5 years - $XX.XMM in last 12 months generate business revenue - ie HP, Visa, IBM

Marketing project spend as % of sales has declined from avg of X.X% during 2005-2008 to a projected X.X% for 2009 AOP We will gather new consumer insights that can be applied to our growth and

Economic environment continues to limit the cash available to fund growth initiatives productivity initiatives - buying patterns, new services, etc

We need to find new ways to fund investments in Marketing, R&D, SFC & GBD to help drive Net Sales growth We will broaden our distribution channels - ie HP, Dell, Google, avery.com, etc

to drive increased business revenue

Business Case - What is the customer or business need?:

We have assets and consumer access that are valuable but have not been monetized to their full potential

Finding ways to derive more direct revenue from these existing assets can help fund growth initiatives quickly

We need to develop a stream of investment income to bring Marketing, R&D, SFC & GBD funding to sufficient levels - X% of sales VI. Action Plan - What must be done to implement the strategy?

Tactics Functions

RequiredWho When Status

A. Monetize consumer reach vehicleseMail Mktg, Legal,

BrandJ.Do, CE Q2

(Ehrenhalt/Do)eMail Mktg, Legal,

BrandJ.Do, CE Q2

Pkging,Legal,

Supply ChainCE, TA Q2

a.com Mktg,

Legal, BrandCE, DM Q2

Metrics with targets: $X.XMM EBITS/W Mktg, Legal,

BrandCE, BD Q2

B. Develop strategic alliances & affiliatesBU's, Sales, S/W,

a.com

JK, DM,

SBQ1-Q4

(Kingsley/Ehrenhalt)Alliance, BU's,

Sales

JK, MC,

SR, KPQ1-Q4

USPS On-line Store, Label UniverseAlliance, BU's

Sales

JK, MC,

RWQ1-Q4

Metrics with targets: $X.XMM Rev. ($1MM in AOP)Alliance, BU's,

Sales, Search

CE, JM,

BAPQ1

** 2009 AOP includes $2.2MM marketing productivity savings C. Drive eCommerce revenue on avery.coma.com Mktg, DR,

SalesBAP, RP Q1

(Maxson)a.com Mktg,

Sales, CIDM, RW Q1

a.com Mktg, BU's,

Sales

MC, SR,

BAPQ2

Metrics with targets: $X.XMM Rev. ($XMM in AOP)a.com Mktg, BU's,

Sales

BAP, RP,

RWQ2

D. Monetize S/W downloads & capabilitiesAvery.com, Bus

Dev, LegalCE, BD Q1

(Dillon)SW Dev, Bus

Dev, LegalBD Q3

Metrics with targets: $X.XMM EBIT ($XXk in AOP)

iStockphoto initiative success opened our eyes to new revenue streams Execution was complex, disruptive to ops, & resource heavy E. Monetize patents and brandsAlliance, Fin,

Brand, LegalCE Q1

Identified new ways to increase direct to consumer sales on the web Limited number pursued due to fear of negative customer reaction (Santhanam/Ehrenhalt)PDev, Fin, Brand,

LegalRS Q2

Avery consumer-facing marketing communications targeted & reach many Difficult to balance competing internal & external demands for space Metrics with targets: $X.XMM EBIT

Identified a range of ways to drive new revenue Two people assigned to find partnerships, develop them & execute

Consumer interactive marketing platforms completely renovated Platform fixed costs a higher % of budget & challenging in soft econ VII. Improvement Metrics - How will we measure the improvement?

Multiple companies are seeking access to our database, techs, & brand Concern over gving away competitive advantages & hurting brand Portfolio Operating Metrics: Target Financial Target Summary: Revenue Re-Invest Status

Portfolio Payback 100% in 12 months/break-even current yr Target Target

Recap key problems and opportunities Benefit/effort ratio Greater than 0.8 A. Monetize consumer reach vehicles 1.5 MM

Selling existing products directly to consumers bears upside & some risk Parameters on what's OK and what's not aren't clear B. Develop strategic alliances & affiliates 2.0MM

Many creative ways to derive revenue identified, but execution is slow Limited human resources, competing business priorities, ops complexity C. Drive eCommerce revenue on avery.com 2.5MM

Avery capabilities and assets have value to consumers & 3rd parties Fear of hurting Avery brand, competitive advantage & consumer experience D. Monetize S/W downloads & capabilities 0.5 MM

There are near term revenue opps, but also longer term opps Solely focusing on quick cash in 2009 could compromise 2010-2011 opps E. Monetize patents and brands 0.5 MM

4.5MM 2.5MM

In 2009, we will find $X.XMM in incremental EBIT to reinvest in our business growth initiatives and an incremental $X.XMM in revenue by 1.5MM 2.4MM

finding new ways to monetize our brand, consumer access, digital and physical assets, and partnerships while laying the foundation

for a 3-5 year pipeline of investment and revenue dollars.

Each initiative will be evaluated on its own merit for return on financial investment and human effort

We will focus on delivering our 2009 objective, but will have a longer term line of sight

We will fund our initiatives from the revenue that we bring in Gain alignment on appropriate level of global versus OPNA support

We assume that the appropriate resources will be made available to execute new revenue model opps Develop parameters/guidelines for acceptable brand and partner affiliations

We will have a bias to longer term partnerships that are compatible with our brand versus short term "opportunistic" partnerships Create clear valuation targets for Avery's media assets

We will be globally opportunistic, but our primary focus will be OPNA

Evaluate linking program from avery.com to

sell branded ink cartridges

Q1 SMB mailing bundle; Q2 CE bundle; Q4

mailing bundle; Q3 Staples program

Action Staples collaboration; 1 at a time label

offering and eCommerce - eval other options

Affiliate Marketing Program

Roll-out on-line postal store test more

broadly; pursue Label Universe business

Launch Q1 test with scrapbooking; roll out to

ASB if successful.

HP eCommerce, Retail, Pdct, sub-logo licensing

Dell.com Bundles & Q3 Staples Ret.

I. Problem statement and business case - Why are we talking about this?

Pursue iStock or similar deal

Benchmark best practices; rates & find

partners

Implementation Activities Implementation Checkpoints

3rd Party eMail Sponsorships, AffiliatesBenchmark best practices; rates & find

partners

Benchmark best practices; rates & find

partners3rd Party Newsletter Sponsorships, Affiliates

II. Current condition reflection and analysis - What have we learned, where are the problems, what are the causes?

3rd Party Packaging In-Packs

3rd Party Advertising on avery.com

Evaluate various options (ask.com, google,

msn), choose partner, implement

Assess current unused IP portfolio and

identify potential licensees; pursue HP in Q1

3rd Party Advertising in softwareBenchmark best practices; rates & find

partners

Free Shipping with minimum order

Toolbar with downloads

Affiliate links/rev share to non-Avery products

Promote "free shipping" more actively on site

Brand & Sub-brand Licensing OppsContract with LMCA in Q1 to bring in potential

opportunities for assessment

Increase visibility of data available from CI

channel partners - esp Staples

Unique Bundles & Active Cross SellIntegrate cross-sell, up-sell and unique

bundles in the shopping area of web site

Channel Intell. Lead Generation

1/31/2009

1/31/2009

IV. Rationale for updated strategy, evaluation of alternatives - Why is this the right strategy and approach?

License DesignPro engineRenew contract with Nova, identify and

pursue other possible licensees.

Causes to address

TOTAL:

Patent Licensing Opps

Incremental to AOP:

VIII. Requests to senior management / Follow-up on unresolved Issues - What other needs or concerns exist?

III. Strategy goal statement and hypothesis - What are we planning to achieve?

Develop parameters/guidelines for selling existing products directly to consumers via the web

Ensure cross-functional resource strategy exists for execution

WHENWHO

1/31/2009

1/31/2009

Action

Robert W. & David M. with Amy

& Todd

Todd, steering team

Todd, steering team

Bruce, steering team

Bruce, steering team

1/31/2009

Allison Phillips

Todd Thompson

Amy Ladwig

Steve Burns

Ramin Heydarpour

Joe Moffa

Brian Daly

Tim Bond

Sign-off's to Ensure Firm Commitment to Resource and Support

Existing assets not fully monetized

33MM software & template downloads

60MM targeted e-mails

30 MM website visits

40MM packages

2MM samples

2.2MM names

Cash flow value potential = ???

Increased project spend funds generated by new revenue stream

15.3

22.119.4

1310.1

0

5

10

15

20

25

2005 2006 2007 2008 2009 AOP

Marketing Project Spend ($MM)825.5 830.8

764.4

689.1 695.8

500

550

600

650

700

750

800

850

2005 2006 2007 2008 2009 AOP

Net Sales ($MM)

1.9%

2.7%2.5%

1.8%1.4%

1.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2005 2006 2007 2008 2009 AOP w/ $2.5MM new EBIT

Marketing Project Spend as % of Sales

A3’s for:

• Solving problems

• Deploying strategies

• Making improvements

• Managing projects

Family and Community Focus Relationship with Members & The

Company

• A Caring Company

Flower Fund

Grief Committee

Birthday Cards

Family and Community Focus Relationship with Members & The

Company

• Eliminating Social Distinctions

Same Dress Code (Uniforms)

Same Parking Lot

Same Restrooms

Same Lunch Room

Open Offices

Teams and Work Groups are

Basic Units of Toyota Organization

Team

Leader

TM TM TM TM TM TM

Team

Leader

TM TM TM TM TM TM TM TM TM TM TM TM TM TM

Team

Leader Team

Leader

Group

Leader

Inputs

Customer

Value

Safety

HR

Quality

TPS

Maintenance

Engineering Ideal

Span of Support

1:5

Employee Involvement Teams

Stage 1

Orientation

Stage 2

Dissatisfaction

Stage 3

Resolution

Stage 4

Production

Stage 5

Termination

Adapted from R. B. Lacoursiere, The Life Cycle of Groups

Team Development Model

HIGH

LOW

TIME

Productivity

Morale

ESI PROGRAMEarly Symptom Intervention

Injury

Pain

Discomfort

Difficulty on Process

T/M must go to IHS

ESI stage

0

1

0

First Prevention, then ID abnormality at first opportunity

Two Way Communication

• Company Communicating to Members

• Members Communicating with the Company

• Members Communicating with each other

Types of Meetings and

Standard Frequency and Length

Management

Level

Meeting

Type

Frequency/Length Purpose

TL KYK Daily/5 minutes Safety

GL Huddle Daily/5 minutes KPIÕs & discussion

GL Lunch Box Monthly/1 hour Identification snd PDCA of group

issues with assignment and

tracking

Asst. Manager

and Plant

Manager

Town Hall Monthly/1 hour State of the Department and open

discussion, with tracking the

countermeasures of identified

issues

Asst General

Manager and

General Manager

Lunch Box Monthly/45 mins A random selection of 5-6 team

members at a time to build

relationships and ID and resolve

issues.

VP and President Roundtable Quarterly/90

minutes

A random selection of all team

members, with 25-30 members at

a time, meeting with the President

for sharing of company

information and open discussion

to ID member issues

Model of Effective Two-Way Communication

M u t u a l T r u s t a n d

R e s p e c t

R e l a t i o n s h i p

C o n t i n u o u s I m p r o v e m e n t

R e s p e c t f o r P e o p l e

4.

Reflect,

Review

And

Revisit Plan Me

2.

Cultivate

Ideas

1.

Goals

and

Gaps

You

3.

Monitor

and

Measure

Types of Conflict

There are three common types of conflict.

1. Intrapersonal conflict: you vs. you

2. Interpersonal conflict: you vs. me

3. Team conflicts: others vs. others

Conflict Handling Modes Definitions

• Competing - Pursues one’s own concerns at the other person’s expense

• Accommodating – Neglects self to satisfy others

• Avoiding – Does not pursue one’s own or the concerns of others

• Collaborating – Involves self in working with others to reach a satisfied

solution for both parties

• Compromising – Finds a mutually acceptable solution which partially satisfies

both parties

Adapted from “Conflict and Conflict Management” by Kenneth Thomas in The Handbook of Industrial and Organizational Psychology

Toyota Way Leadership

• Servant Leadership

• System of Checks and Balances

• Values Report Card

• Peer Review Process

Workforce Mgt Philosophy

The purpose of Human

Resources is to embody

management, that respects

people creating continuous

prosperity, for the company.

Role of HR Fair & Consistent Policies and Practices

• Ensure no favoritism

• Maintain work discipline

• Consistent and Fair discipline

• Controlled attendance

• Check Action – Trust Audit

Recognition & Corrective Action

• Company and supervisor recognizing quality work

• Trust economy vs. Entitlement Economy

• Company recognizing sub standard work or unfair work practices and addressing it

• Members having the ability to recognize sub standard performance and unfair work practices and getting it addressed (checks and balances)

Wage & Benefit Philosophy

•Support employment security

•Stable pay program – avoid fluctuations

•Remain competitive within the industry

•Reflect overall company performance

•Promote & reward continuous

improvement

Compensation Graph

83%

5%

12%

Base Bonus Performance Award

Visual Management System • A comprehensive system that aligns floor management

and development activities to achieve company targets by:

Aligning Hoshin shop floor activities with Hoshin goals/objectives

Visually demonstrating:

The management condition of the shop.

Alignment of daily activities to Hoshin targets.

Promoting two-way communication, creating the environment to:

Address abnormal conditions through targeted

problem solving.

Determine needed support and resources.

Develop team members.

Floor Management System Components

Effective Shop Floor Management

Focuses on building an effective visual

management system to help the group achieve

Hoshin targets.

Team Member Skill Development

Activities and tools to help develop team

members capabilities to perform Standardized

Work and achieve daily production goals with safety and quality.

Team Board-Floor Management Development System

Quality Section of Team Board for Floor Management

Development System

Hoshin Review- PDCA Cycle

・Intervals

・Entire Company

・Individual

Result Check

Grasping the gap between the daily

plan and actual performance

Process Check

Group

Individual

Day

Sr. Mgmt

Dept Mgmt

Subsection

Week 6 12

Month

s

1

82

Fujio Cho, Chairman, Toyota Motor Former President, Toyota Motor Manufacturing,

Kentucky:

3 Keys to Lean Leadership:

1. Go See.

• “Sr. Mgmt. must spend time on the plant floor.”

2. Ask Why.

• “Use the ‘Why?’ technique daily.”

3. Show Respect.

• “Respect your people.”

Summary Connecting the “Product and the People”

Value Streams

• Lean can only be effective with both.

• Lean implementation is accelerated

with simultaneous development

of both, saving cost.

• Lean is sustained and continuously

improved with both, increasing the

payback on investment.