DTE Energy’s continuous improvement journey and embedded learning methods Jason Schulist April 19, 2010

DTE Energy’s continuous improvement journey and embedded learning methods

Jason SchulistApril 19, 2010

DTE Energy background

• $8.1 billion revenue• $7.4 billion market capitalization• $23.9 billion asset base• Main subsidiaries:

– Detroit Edison (1903)• 2.2 million electric customers

– MichCon (1849)• 1.3 million gas customers

– Non-regulated businesses:

• Unconventional gas: Landfill, coalbed and shale methane

• Coal & gas transportation• Gas storage• DTE Energy Trading• Power & industrial projects• DTE Energy Ventures

© 2010. All Rights Reserved. 2

•9,527 employees•Operations in 42 states

DTE Energy’s continuous improvement (CI) journey has spanned over 12 years

Kaizen(1998)

Moretools

(2000)

DemoProjects(2002)

Six SigmaAdded(2004)

OSCreated(2002)

PEP(2006)


First Phase

In 2002, the DTE Energy Operating System (OS) was developed

Strengths• Easier to get buy-in• Consistent message across organization• Common language and vision• Standard practices• “Lean” metrics promote right behavior• Starts to think about CI from a cultural

perspective

Weaknesses• VERY SLOW progress – OC commitee

wordsmithed• Expensive• Feels overwhelming, leads to stalls• Bias toward power point presentations

instead of action• Lack of ownership if driven by staff function


Kaizen(1998)

More tools

(2000)

DemoProjects(2002)

Six Sigma Added(2004)

OSCreated(2002)

PEP(2006)

DTE Energy Operating System (2010)

© 2010. All Rights Reserved.5

In 2004, DTE Energy added Six Sigma to the Operating System

Strengths• Uses very vigorous statistical

analysis• High interest/support from BUs• Can solve top management

problem and get support for further projects.

• DTE Energy engineering culture lends itself to approach

Weaknesses• Can lead to analysis paralysis• BB can do too much on their own—

misses chance for employee engagement

• CI work delegated to CI function• May never build connected flow or a

system• CI and Six Sigma were still

considered an option


Kaizen(1998)

Moretools

(2000)

Demo Projects(2002)


OS Created(2002)

PEP(2006)

Results of CI efforts were improving but not hitting the bottom line fast enough...


0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008

mill

ion

s

Soft

Hard

The Performance Excellence Process (PEP) was created as a result of BUs lack of speed and commitment towards the OS

Strengths• Top down leader driven approach• Clear expectations and

accountability• Rigorous process to look at costs

of each organization based on activities

Weaknesses• Process did not result in deep

engagement of front-line employees• Consultant-driven process did not

engage all existing CI improvement resources

• Top-down process expectations led to BU reaction versus BU proaction around CI efforts


Kaizen(1998)

More tools

(2000)

DemoProjects(2002)


OSCreated(2002)

PEP(2006)

What’s next?

So how is DTE Energy’s CI evolving?

Kaizen(1998)

More tools(2000)

DemoProjects(2002)


OSCreated(2002)

PEP(2006)


People development focus

Employee involvement

Process improvement tools

Lean learning organization

(cultural)

Value stream mapping and implementation

TOYOTA’sAspiration

Value stream

Isolated processes

Technical tools – short-term results

Management orientation

Imp

rove

men

t fo

cus

Toyota’s approach focuses on people development and value streams

Liker – Toyota way Fieldbook© 2010. All Rights Reserved. 10

People development focus

Employee involvement

Process improvement tools

Lean learning organization

Value stream mapping and implementation

Value stream

Isolated processes

Technical tools –short-term results

Management Orientation

Imp

rove

men

t fo

cus

DTE Energy’s journey has not tapped the lean learning organization approach and only recently has focused CI efforts towards value streams

2004

2002

2000

1998

2006

200820??

Adapted form Liker – Toyota way Fieldbook


2009

The path forward lends itself to a lean learning organization approach

Lean Learning

Org.

Kaizen(1998)

Moretools

(2000)

DemoProjects(2002)

Six SigmaAdded (2004)

OSCreated(2002)

PEP(2006)


Lean learning organization (LLO) lends itself to organizational cultural transformation

• Executive leadership– Top execs are expected to carve out time to learn what to do, how to champion, how to lead in a lean

sigma operating world– Execs would own and be fully accountable for their continuous improvement deployment and OS

would not merely be an “option”

• Culture change is extremely hard and suggests significant mental model change of individuals and company – can’t be a program

• Culture change must occur at executive, leader, and individual level• Integrate organizational learning practices into efforts• Met with Ed Schein that led to the wisdom of focus on what bothers you and start

acting and doing – culture as a byproduct of the work• Think to a new way of acting or act to a new way of thinking!


Kaizen(1998)

More tools(2000)

Created OS

(2002)

Add Six Sigma

(2004)

DemoProjects(2002)

PEP(2006)

LLO(2007/8)


Shook’s Version

Old Model Change thinking to change behavior

New ModelChange behavior to change thinking

Schein’s Version

Schein proposed that the way to change culture is to change cultural artifacts-the observable data of an organization, which include what people do and how they behave. Anyone wanting to change a culture needs to define the actions and behaviors they desire, then design the work processes that are necessary to reinforce those behaviors.

John Shook, MIT Sloan Management Review, Vol. 51 NO.2 How to change a culture: Lessons from NUMMI

How Culture Changes – and Doesn’t

Why do companies fail in sustaining their CI efforts? – the four failure modes

• As DTE Energy has had difficulty in sustaining its own efforts, we looked to research on why others fail:

• Companies copy lean tools without making the work self-diagnostic• Companies work around problems even when they are recognized• Companies don’t share systemically what has been learned locally• Companies don’t develop the capabilities of others to design work,

solve problems, and institutionalize new knowledge


S. Spear

• Capability 1: Design work to see problems as they occur

• All work is designed so best practices are captured and problems are evident immediately.

• Capability 2: Swarm problems when they occur

• Problems are immediately addressed, both to contain their effects from propagating, and to trigger problem solving.

• Capability 3: Share knowledge where it is created

• Knowledge generated locally becomes systemic through shared problem solving.

• Capability 4: Leaders develop people from teaching, coaching, and mentoring

• The most senior management has to own the capability development process.


Capabilities of the operationally outstanding

How We Work


Capability 1Design work to see problems as they occur.

•Pre-specification, embedded test, escalation

•OPCA

How We Work


Capability 2Countermeasure problems rapidly at the point of activity.

•Scientific method

•Rapid, low-cost experiments

•Go and See

How We Work


Capability 3Share new local knowledge across the enterprise.

How We Work


Capability 4Leaders develop engaged employees through teaching, coaching and mentoring.

•Leadership characteristics

•Humility

•Passion for activity

•Patience

•Desire to Learn

DTE True North

• On Demand– Pull– 0 Lead Time

• Defect Free• No Waste, Lowest Cost

– (Transportation, Inventory, Motion, Waiting, Over production, Over processing, Defects)

• Safe (Physical, Emotional, Professional)• Stick to physics (can only reach theoretical limits)


Results of CI work – 8 years $1.1B in savings


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IQPC 2009Best Process

Improvement program

Questions??


Save them for the Panel !!

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DTE Energy’s continuous improvement journey and embedded learning methods Jason Schulist April 19, 2010