Lean Transformations Group

A Tale of Two Cities

"It was the best of times; it was the worst of times."

I kept thinking about that very famous Dickens quote as I was reading two articles in the Grand Rapids Press the other day. The first article was about the opening of a new indoor/outdoor market in downtown Grand Rapids, Michigan. It is in an area that 3 years ago would have been considered unsafe to walk in anytime day or night. The second article was previewing the third annual "Art Prize" starting September 18 and running for 19 days through October 6. This is the fifth year for this fantastic event that covers three square miles of the downtown area, draws upwards of 500,000 people, and awards prizes to the artists through public voting via mobile phone.

This was all happening while at the same time Detroit was entering its 8th week in bankruptcy.

In the State of Michigan, it really is a tale of two cities. Michigan's governor, Rick Snyder, made this comment a few weeks ago regarding the Detroit bankruptcy:

The fiscal realities confronting Detroit have been ignored for too long. I'm making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future. This is a difficult step, but the only viable option to address a problem that has been six decades in the making.

Detroit has certainly had its share of problems. I will not expound on them in this article but instead focus more on what Grand Rapids did to spare themselves this grief.

I suppose the first question we should ask is how in the world can we have Michigan's two largest cities at the most opposite of polarities? What did Grand Rapids do that Detroit didn't?

First of all, Grand Rapids and the leadership in the City saw the trouble coming and decided to make some hard decisions that they knew would likely be unpopular in the short run. In order to maintain the quality of life in the city and provide a window to transform, the City asked and got approval from the voters in 2010 to approve a temporary tax increase that will expire on June 30, 2015. For Fiscal Year 2011 the projected General Operating Fund deficit of $33 million (30 percent) was reduced and a transformation plan was put in place to achieve a General Operating Fund where ongoing expenditures have been matched to ongoing revenues two years prior to the expiration of the temporary income tax in 2015.

The City actually started thinking strategically even before that. In 2005, then City Manager Kurt Kimball and Mayor George Heartwell convened a group of business leaders asking for advice. Prior to this, the City had been through many "flavors of the month" approaches (Total Quality Management, Reinventing Government, Good to Great) only to see them fall by the wayside. They had already cut 182 employees and still needed to figure out a way to provide the residents with their necessary services, and they knew times were going to get tougher. These private sector business leaders encouraged the City to focus on Lean as a transformation approach. They knew that the private sector had already been using Lean with phenomenal results for years.

The collective group decided to go forward with the Lean approach. Deputy City Manager Eric Delong was put in charge of this project and has continued to drive this approach for what is now seven years with the continued support of City Manager Greg Sundstrom, Mayor Heartwell and the City Commission.

After approval by the City Commission, the team started with a Value Stream* approach on three major value streams selected by City Leadership as pilots. We used these three to serve as a "Learn by Doing" approach, which is an embedded methodology in the Lean philosophy. The people who do the work were engaged in identifying the problems in their work and selecting and testing countermeasures to improve it. We quickly realized, in two of the initial three value streams, that we bit off way more than we could chew. The first two were cross departmental and made us realize that you can't eat an elephant in one sitting. We ran into too many issues and this required us to scale back and rethink our tactics.

We also learned quickly that when you start to get people engaged and show them that they are respected and their voices are being heard, it can catapult the engagement far beyond what you initially think is possible. Soon, people started to grab smaller inter-department value streams and use the same methodology to improve them. Initially there was concern, because parts of the organization were moving ahead without waiting for leadership approval. The concern changed into joy, though, when the leadership realized organic reproduction of Lean thinking was taking place in the organization. That is actually one of the goals, and it was great to see it occurring.

Though this path was difficult, it yielded tremendous results that heartened the group. Here are just a few:

The City has conservatively calculated savings in excess of $800,000 and has indicated that it could really be in the $ 1 million to $1.3 million range. You can track the results on the City's website (search for "Lean Initiative").

"Real Results from Real People"

Business Fire Inspections

  • Number of inspections increased 100 percent
  • Added company inspections
  • Total inspections from 500 to 1300 per year

Parking Refunds

  • Wait time for refunds was reduced 85 percent
  • From 7-67 days down to 12 minutes

Housing Rehab Loan Approvals & Closings

  • Wait Time for loans reduced from 140 days to 9-72 days
  • First time accuracy went from 60 percent to 95.2 percent

The City continues to expand their lean efforts. They are working to make "Lean Thinking a business practice as normal as taking a shower or brushing your teeth," says Deputy City Manager Eric Delong. In order to continue the momentum they have trained another 200+ employees in a Problem Solving process called "A3 Problem Solving."

This is a Toyota Based method emphasizing a scientific approach to problem solving. This Plan-Do-Check-Act approach brings together City employees, each bringing a problem they are empowered to solve. The two-day process, with a week in between the two days, allows the employees to dialogue with other involved employees, making sure they have first defined the problem in measurable performance terms before coming up with a countermeasure (proposed solution) to resolve the problem. The initial results added another $300,000 over and above the value stream savings, spurring them to continue with this work.

As important as these savings are to the City's survival, a second benefit that has even greater long term benefits has emerged. More and more of the City's employees have been empowered and engaged in the process of transformation and sustainability. People are having the opportunity to contribute to their future job security.

Lean Thinking has become the bedrock on which the City is rebuilding itself. They intend to "Act their Way to a New Way of Thinking."

I can't help but think that if only Detroit had been more strategic and willing to face the issues and make the changes and sacrifices necessary to become more efficient, this "Tale of Two Cities" would have had a happier ending for both cities. There is still time to adopt this framework and make a critical difference.

* Value Stream – all the steps both value creating and non-value creating to complete a product or service from beginning to end.

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