Featured Product
This Week in Quality Digest Live
Lean Features
Jim Benson
Role definition is important
Brian Lagas
Help employees overcome obstacles and develop scientific thinking to solve problems
Harish Jose
Hint: The problem statement is never the problem
Quality Transformation With David Schwinn
Four elements of Deming’s worldview we often overlook
Kevin Meyer
‘Most of us look for reasons when we fail, but few of us look for reasons when we succeed.’

More Features

Lean News
Making lean Six Sigma easier and adaptable to current workplaces
April 25, 2019 workshop focused on hoshin kanri and critical leadership skills related to strategy deployment and A3 thinking
Makes it faster and easier to find and return tools to their proper places
Adapt lean in a way that makes sense for your service organization
Remanufacturing is a way to transform a disposal burden into a business opportunity
Version 3.1 increases flexibility and ease of use with expanded data formatting features
Results for a three-day, waste-free conference were 2,061 pounds of waste diverted from the landfill
The FDA wants medical device manufactures to succeed, new technologies in supply chain managment
Marking floors is an easy and efficient way to direct behavior, promote safety, and reinforce workplace standards

More News

Kevin Meyer

Lean

Looking Forward With Alfred Adler

How an Austrian psychotherapist sheds light on budgeting

Published: Monday, December 10, 2018 - 13:01

Iam not really sure how it started, but one day a couple months ago, I found myself diving down an internet rabbit hole in search of more information on a guy named Alfred Adler. Adler was an Austrian psychotherapist in the early 1900s who, although a good friend of Sigmund Freud, developed a theory of individual psychology nearly the opposite of Freud’s.

Adler’s perspective can most simply be described as “look forward, not backward.” Whereas Freud focused on how the past affects current decisions (etiological), Adler suggested focusing on how a current decision will affect the future (teleological). Like every varietal of both legitimate and fad psychological theory, this spawned some self-help books. Not usually my genre, but I came across a fascinating book with a unique presentation style, and spent a few days knocking it out.


“Meanings are not determined by situations, but we determine ourselves by the meanings we give to situations.”
–Alfred Adler

The Courage to Be Disliked, by Ichiro Kishimi and Fumitake Koga (Atria Books, 2018), is sort of like Adler meets Stoicism. The entire book is a Socratic dialogue between a student and a philosopher, which helps make it an enjoyable read for the non-psychologist. It doesn’t veer off the deep end too often, and simply tries to help you reframe your perspective to focus on a future driven by goals that then guide current-day decisions.

Now, the reason I will sometimes venture into individual psychology is because there’s often an analogue to organizational psychology or even basic organizational leadership. This book slides right into that, and I immediately thought of several relevant parallels.

Consider the craziness of budgeting, which most organizations unfortunately endure. Sometime around September or October, the process will begin, looking backward at financial history, then imposing some arbitrary mandate like, “Keep spending flat while increasing sales 25 percent.” That preliminary budget will go up the chain, get bloodied up to further veer from any potential reality, and after lots of anguish and gnashing of teeth, will be set in stone retroactively around February or March.

By then it’s already outdated, and the underlying assumptions, if there were any meaningful ones to begin with, have probably diverged from current business reality. Therefore it’s obviously time to start spending countless hours on variance analysis, coming up with explanations for missing budget, and presentations to executives on what will be done to fix it. To top it off, the entire process is based on an arbitrary calendar year, which is usually completely unrelated to desired business activities, which are often unrelated to creating customer value.

A decade ago I was president of a midsized medical device company. We were well into our lean journey, and I was starting to think about lean accounting. I dragged our CFO to one of the first Lean Accounting Summits, where there were several presentations on the craziness of budgeting, the silliness of arbitrary calendar year time frames, and the incredible waste created by the budgeting and then variance analysis process.

At the end our CFO looked at me, nodded, and the day we got back, we told the entire company that we were going to stop budgeting. Effective immediately. As a private company, we could do that. We stopped, and after some initial panic, the accounting department found they could now spend a lot more time helping the operations group analyze and thereby improve costs, and the other departments could focus on improvement.

We stopped looking backward and using the past to guide our decisions. Instead, we set goals for the future and made financial decisions with that in mind. Those goals were tied to hoshin plans, and reviewed quarterly. Although we still reported financials monthly with a calendar-year summary, the projects, goals, and associated funding were not tied to the calendar year.

(Side note: One interesting downside we observed after a couple years was that the traditional budgeting process had provided a lot of informal Finance 101 training for the non-accounting folks. Without budgeting we ended up having to find other ways to provide that exposure.)

Yes, understanding the past can be important for context. But just as with a balanced individual life, you should put the past behind you and focus on the future, spend most of your organization’s time looking forward, focused on goals that are tied to principles, strategies, and creating customer value.

First published Nov. 15, 2018, on Kevin Meyer’s website.

Discuss

About The Author

Kevin Meyer’s picture

Kevin Meyer

Kevin Meyer has more than 25 years of executive leadership experience, primarily in the medical device industry, and has been active in lean manufacturing for more than 20 years serving as director and manager in operations and advanced engineering, and as CEO of a medical device manufacturing company. He consults and speaks at lean events; operates the online knowledgebase, Lean CEO, and the lean training portal, Lean Presentations; and is a partner in GembaAcademy.com, which provides lean training to more than 5,000 companies. Meyer is co-author of Evolving Excellence–Thoughts on Lean Enterprise Leadership (iUniverse Inc., 2007) and writes weekly on a blog of the same name.