CHAPTER 1

INTRODUCING LEO

Back in 2003, the chief executive of a large East Coast hospital invited me toan 11 a.m. meeting with him and his leadership team. "We have a problem," hebegan. The organization had gone through weeks of training in Six Sigma with thegoal of trimming waste and boosting efficiency. But six months later, theresults were meager. He wanted to know if I could help.

In the course of our talk, I asked each of the six executives what I thought wasa simple question: "You learned a lot of tool sets during your training, so tellme what percentage of them you've been able to apply in your work." The answersshook me. "Fifty percent," said the chief medical officer. "Thirty percent,"said the CFO. All six of them had the same basic response: a huge chunk of theSix Sigma tools they had spent so much time learning was simply inappropriate totheir needs.

It's ironic in a way. At a time in history when we have, more than ever, anabundance of impressive management tools to help us seriously ratchet upperformance, most of us have made only marginal gains. Lean manufacturing,reengineering, Total Quality Management, Six Sigma: on and on the list goes. Ahandful of inspired leaders—Jack Welch of General Electric comes tomind—have made the most of these tools. But many companies have investedhuge amounts of time, energy, and cash in them without significantly improvingthe quality of their operations.

After the meeting with the hospital leaders, I called my own team together. NowI was the one saying, "We have a problem." Like the rest of the managementcommunity, we had been automatically introducing the whole gamut of Six Sigmaand the other management tools into companies without having an in-depthunderstanding of the companies' goals, their cultures, or their core strengthsand weaknesses. "We have to change," I said. "We have to start tailoring thetools to fit each company's circumstances." No more cookie-cutter presentationsfor us.

That was when we began to develop the management approach that we now call LEO,for Listen, Enrich, and Optimize, and we have spent all the years since thenputting it to the test in one organization after another. It has passed withflying colors, because LEO is not simply another management tool; rather, it isan overall methodology that makes it possible to apply management tools tomaximum advantage. In other words, LEO represents a new mindset, atransformational way to think about the decisions that managers on every levelmake and the actions that they take. It is a system devised to help companiesdramatically improve their performance, to make quality part of their corporateDNA.

When I go to visit a company today, I explain the LEO strategy. I assure theleaders that whatever suggestions we make, and whatever management tools weemploy, will be geared precisely to their company's special needs and particularmakeup. If they follow the LEO methodology, they will achieve a major,measurable increase in the quality of their operations, their products, andtheir bottom line.

In the chapters ahead, I explain the various aspects of LEO in detail. I alsoshow through case histories how it has actually been implemented, although thenames of the companies described and sometimes the products or services thatthey provide have been altered to protect their confidentiality. Right now,though, I would like to introduce you to the basic elements of the LEO strategy:

• LISTEN: Observe and Understand. To obtain a deep comprehension of theissue at hand, put aside past assumptions and interact directly with allrelevant parties—specifically including customers, suppliers, andemployees. Add to your findings whatever relevant data can be uncovered.

One of a company's two call centers was experiencing many more database-entry errors than the other. Company managers suspected that it was a trainingproblem, assuming that the errors were concentrated in the third shift, wheremost new hires were assigned. We began the Listen process with intense datamining of the center's records. When we analyzed the figures, we discovered thatmost of the errors were in fact committed during the first shift and wereclustered in a single row of 20 workstations—a row that was next to thewindows. The glare from the windows was making it difficult for workers to seetheir screens clearly. Our suggestion that the company cover the windows wasvetoed by the public relations department, which led frequent tours through thecenter. Instead, tinted window glass was installed and glare filters were addedto each workstation. Entry errors were reduced by 95 percent.

• ENRICH: Explore and Discover. Based upon the information you havegathered, reach out to all relevant parties for ideas and possible solutions.The wider you cast your net, the more likely it is that you will move beyond theusual suspects to discover new and better answers.

At a hospital division serving the elderly with neurological problems suchas Parkinson's or dementia, we discovered in the Listen process that manypatients had to go through three to six weeks of tests and waiting for resultsbefore a diagnosis could be delivered. If a patient arrived complaining ofdizziness, say, she might be tested for an inner ear infection; if the resultswere negative, she would be tested in the next day or two for another possiblecause; and so it went as the weeks passed. Based on our observations andnumerous interviews with patients and staff members, we created a detailed mapof the existing process, identifying areas of waste and inefficiency. With thatlaid out in front of us, we entered the Enrich phase of LEO, using analyticaltools to develop new and improved patient flow.

Today, after an in-depth interview with a geriatrician, patients are given aseries of basic tests on the first day that cover most conditions. Then all oftheir doctors get together to consider the results and jointly arrive at adiagnosis and treatment plan. Their conclusions are passed on to the patients bya neurologist or geriatrician. The whole process can take as little as twodays.

• OPTIMIZE: Improve and Perfect. Examine the solutions you have foundand select the best. Subject it to every kind of challenge it might conceivablyencounter, and correct any and all possible shortcomings.

When a new application was found for its electric motor, a company'sengineers would come up with a design and put the result through a 12-weekprocess to make sure it worked properly. If it failed the evaluation, they wouldcome up with another design and go through the whole process again. We suggestedanother approach that is part of LEO's Optimize phase. Instead of focusing onthe nuts and bolts of a particular design, we turned our attention to theessential purpose of the motor—to transform electricity into torque,causing a shaft to turn. We eventually found that by closely measuring theefficiency of that transformation under various conditions, we could accuratelypredict whether a new design would pass the evaluation process. Now, rather thanputting a new design through a dozen weeks of testing, the engineers candetermine its quality in all of 10 minutes.

By rigorously and consistently using one or all of the LEO guidelines, thesethree companies achieved far higher levels of performance, thereby measurablyenhancing their products, services, and finances. That's because LEO can findanswers to the questions that plague managers everywhere: Why are my salesdropping off? What can I do about my excessive scrap? How do I reduce highturnover? How can I match my competitor's price? Why is my new product pipelineempty? How can I get to best in class in my industry?

In the final analysis, though, the answers to all these questions boil down toone word: quality. The unending pursuit of quality, of perfection, isthe single most important action any individual or organization can take toresolve problems and achieve goals.

We all know quality when we see it. I think of the performance I attended byRavi Shankar, the great Indian composer and sitar virtuoso. He was 88 years oldat that time, but the standard he set for himself and the musicians whoaccompanied him never flagged. Show or no show, if their playing was anythingless than perfect, Shankar's eyes would blaze at them. Quality above all.

Sadly, the striving for perfection that used to be the hallmark of Americanbusiness has fallen away in recent years, and our economy has paid the price.The loss of quality is manifest in every aspect of our personal and businesslives.

Not long ago, I purchased two books and an audio CD on Amazon.com. When my orderarrived, the CD was missing, even though the shipping slip listed all threeitems. After spending 15 minutes searching the site for a telephone number tocall, I reached a customer service representative. He listened to my tale andimmediately promised to have the missing CD mailed to me, no questions asked.That led me to inquire whether this sort of mistake happens frequently. "Fromtime to time," he replied. "It's human error."

I don't doubt that Amazon, like most consumer outfits, tries to avoid sucherrors. Yet all of us are constantly encountering something similar in ourdealings with merchants of every kind. It's annoying, and it's a symptom of thequality failures that are plaguing our country. And when those failures occur ona larger scale, it can be frightening.

Ever since a 1999 report by the Institute of Medicine found that medicalmistakes in hospitals caused up to 98,000 deaths a year, leaders of the medicalprofession have initiated dozens of projects to improve patient safety.

Some hospitals set up computerized drug-ordering systems to reduce medicationerrors. Others instituted programs to cut back on infections, including theinstallation of waterless antiseptic hand washes. The schedules of interns wererearranged to avoid the sleep deprivation that can lead to medical error.

But the results have been minimal. One investigation, released in 2010, of 10hospitals in North Carolina found that there had been no appreciable lowering ofpatient injuries between 2002 and 2007—even though North Carolina had beenselected for the study because its hospitals were in the forefront of thepatient safety movement. According to a federal report dealing with Medicarehospital patients for the month of October 2008, 13.5 percent of themexperienced "adverse events," meaning medical errors. In the case of 1.5 percentof the patients, some 15,000 people, those errors contributed to their deaths.

In a 2010 interview with the New York Times, Dr. Robert M. Wachter,chief of hospital medicine at the University of California, San Francisco,summed up the prospects for greater patient safety:

Process changes, like a new computer system or the use of a checklist, may helpa bit, but if they are not embedded in a system in which the providers areengaged in safety efforts, educated about how to identify safety hazards and fixthem, and have a culture of strong communication and teamwork, progress may bepainfully slow.

In other words, you're not going to achieve real quality piecemeal. It requiresan organization's total and continuing commitment to the cause. The ancientGreek philosopher Aristotle said it best: "Quality is not an act, it is ahabit."

THE FOUR CORNERSTONES

There are many paths to quality. LEO projects, for example, may take a month, afew years—or anywhere in between. They may be limited to a single area ofan organization or include the organization as a whole—or anywhere inbetween. It all depends upon the degree to which the management wants to committo the Listen, Enrich, and Optimize approach. Sometimes companies start small,are impressed by the results, and then decide to go for a wholesale deployment.

For organizations that make a major commitment to LEO, their success will bedetermined in large measure by the level of their commitment to four basicprinciples. We call them cornerstones because the more closely you abideby them, the more your total LEO experience will align with your expectations.

The attitudes expressed in the four cornerstones are not arbitrary; they arecarefully considered and essential elements of the LEO approach. Once they areembedded in any organization's culture, its quality will soar.

1. Quality Is My Responsibility

The next time someone stands up at a meeting and talks about quality, listencarefully to the attendees' reactions. Chances are they will be all about whatother people can do to improve things. One person will want to refer the matterto the Quality department. Another person will shrug, saying that it's anoperational issue that's best left to Engineering. That attitude defeats anypossibility of achieving a quality transformation.

The pursuit of quality must be a personal responsibility, reflected in everyaspect of your work. When you make a decision, do you ask yourself whether itwill improve your customers' experience with the company? Do you considerwhether it will improve your employees' motivation? Do you ponder whether itwill advance the quality initiative?

Those are the same kind of searching questions we are all learning to askourselves about the environment: Are we recycling our glass and paper? Are wepicking up after our dogs or turning off the sprinkler overnight? We recognizethe need to be personally responsible for the environment. LEO calls upon us todo the same for our organizations. I say, let everyone become her own qualitydepartment. I say, quality is my responsibility.

Responsibility carries with it accountability, and a LEO organization has noroom for the blame game, the shunting of your responsibility for error ontoothers. Accountability without responsibility is morally repugnant andcounterproductive, poisoning an organization's relationships and culture. Doingyour job to the best of your ability is the starting point. Learning from yourmistakes, doing your job right, and then finding new ways to do itbetter—that's the LEO way.

2. All the People, All the Time

How often have you been in a public space that sports an overflowing trash can?At the end of the day, the janitor walks in and picks up the overflow, and he islikely to do that very same thing every day until he retires. A bigger trash canwould make his job easier and greatly improve the looks of the place, but itnever happens. The janitor never even considers the idea, and even if he did, hemost likely would never bother to suggest it to his boss. Why? "It's not myjob," he'd say.

In a LEO deployment, it becomes his job. There is no way a company can attainquality without the dedication of the whole universe of itsstakeholders—every supplier and distributor as well as every manager andfrontline worker. The quality mission belongs to all the people, all the time.

Leaders have a special duty to constantly reinforce that message by deliveringit in every meeting and every encounter with their reports and by walking thetalk, demonstrating their personal commitment to quality in their own worklives. For example, at your meetings, do you make sure that everyone has achance to speak her mind? It's a hallmark of the LEO approach. And if you makeit clear that you consider it to be important, your aides will pass thatbehavior down through the ranks.

Employees on every level are to be treated as full partners in the qualitycampaign, regularly encouraged to continuously improve their own performance andshare their ideas for improving other operations. Their contributions towardgreater quality need to be acknowledged and, where appropriate, amply rewarded.

3. An I-Can-Do-It Mindset

A salesperson had to meet with a customer in another state. But before she couldbuy the airline ticket, she told me, she had to get four levels of managers tosign off on the trip. I know of one company that actually requires a vicepresident's signature.

Any management that is so insecure about and untrusting of its employees is notgoing to receive the benefit of its workers' best performance or fresh insights.If you treat an associate like a child, don't expect him to behave like anindependent-minded, responsibility-seeking adult.

There's a straight line between leaders' policies and the behavior and attitudesof their workers—and between those attitudes and the company's qualityquotient. In a LEO deployment, management needs to build up employees'confidence in themselves and their readiness to take part in the qualitytransformation.

That means talking to your boss about your role in LEO and the aspectsyou feel secure about, and also those that you're unsure of. It means conductingsimilar discussions with your reports, helping them with aspects they don'tunderstand and inspiring them to have a can-do attitude toward LEO. Managers andline people alike need to be encouraged to think and act outside the box.

Of course, in all your efforts to boost the confidence of those around you, thesingle most important way to inspire them is to demonstrate your own confidenceand can-do attitude in your daily behavior.

4. No One Size Fits All

It's always tempting to look for a policy or a procedure that can be appliedacross the board to any and all situations. It would make life so much simpler.But too often, such solutions prove counterproductive. There are so many specialcases and exceptions that, in fact, one size never comes very close to fittingall. The result: lots of confusion and waste.

That unhappy scenario often plays out when a company takes on a quality programlike Six Sigma, which is typically applied in a strict, no-exceptions manner. Bythe same token, copying a quality program that was a smash hit at anothercompany rarely succeeds, and can actually lower your quality level.

Every organization is unique. Even within the same industry, even within thesame locale, no two companies will have matching management skills, corporatecultures, or talent bases. Just as the transfusion of the wrong blood type candevastate a person, the infusion of the wrong management program can cripple anorganization. A LEO deployment recognizes the absolute necessity of tailoringsolutions to the specific needs of the particular company. If an organizationhas already been trained in Six Sigma tools, for example, the deployment wouldblend the appropriate Six Sigma tools into the LEO program.

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