What are the key factors within an obeya room?

Dear Gemba Coach,

On YouTube and in books like Toyota Kata Practice Guide there is a lot about the A3 storyboards (to conduct improvement kata/coaching kata). Did you ever see them used to share people’s plans and check whether countermeasures were effective? Also, what do you think are the key ingredients/factors within an obeya?

Yes, absolutely. For instance, at AramisAuto.com, a hypergrowth digital company that sells cars over the internet, both A3s and obeyas are key elements of creating teamwork at the executive committee level.

The weekly executive meeting starts with the presentation of a customer complaint in the customer service department, and then one of the management team presents an A3. In the early days of this practice, it was quite cumbersome because other members were discovering the A3 as it was presented, but now the A3 is shared beforehand and required reading before joining the meeting, so the discussion is mostly about questions and clarifications.

The meeting occurs in an obeya room designed to test each other’s main assumptions. In this room we can see displayed:

1. The mission of the company,
2. Current customer issues,
3. Competitors’ tactical moves,
4. Key challenges,
5. Business performance metrics,
6. Company enablers.

An obeya room at AramisAuto.com

The mission – in this case, facilitate car purchases, is all about the value proposition: What is our benefit to society and what is our added value to individual customers: why should they come to us?

Currently,  customer complaints are an issue so the company is trying to figure out what in its processes creates the complaints and how to fix them.

Competitor tactical moves sums up what we understand competitors are trying. In a fast-moving fluid market, this isn’t always clear as competitors include alternative ways of buying a car and what new operators are up to often seems baffling. Then again, when this company started in the early 2000s, the established players scoffed at it, so  …

Obeya’s Hardcore

Key challenges are the questions we ask ourselves in terms of “must do, can’t fail” to take Karen Martin’s expression. Challenges reflect “If we don’t crack this we won’t be there in 10 years.” They are our strongest assumptions about the business and are broken down into specific objectives (think of it as the company’s hoshin kanri).

The hardcore of the obeya is the “enablers” wall. Enablers are the key support processes that allow frontline teams to do their work. 

An entire wall panel is dedicated to business metrics, mixing customers’ Net Promoter Score, employees’ Net Engagement Score, and more traditional sales and EBITDA figures to get some idea of how the business is doing. We all know these are lagging indicators, much like driving the car by looking into the rearview mirror, but this is important to know where we stand, and if we’re progressing or regressing.

The hardcore of the obeya is the “enablers” wall. Enablers are the key support processes that allow frontline teams to do their work. For each enabler, the process owner states explicitly:

• The mission,
• The metric,
• Previous changes,
• Current change,
• Problems remaining with past changes.

So that each member of the executive committee understands clearly what their colleagues are doing and why. At each meeting, the group focuses on one enabler and the CEO leads a group discussion on next steps and consequences for the company as a whole.

The deeper point though is that tools are just tools. Tools don’t improve anything, people do. To explain the spectacular success the company has with lean (last year it recaptured flagging growth and doubled its EBITDA), we need to understand the attitude the CEO brings to the tools.

First, customer orientation. From his schedule of gemba walks, the CEO acquired a gut-level understanding of how the processes of the company could hinder frontline teams in responding flexibly to specific customer requests – which he considers a prime source of competitive advantage. By starting the regular executive meeting with an analysis of a customer issue, he tries to imbue his colleagues with the same deep sense of “customer first, team second, process third.” As the person in charge of each process, functional directors can easily lose sight of both customers and the company’s mission.

Second, fix the team then fix the problems. In studying lean, the CEO clarified his own grasp of the key importance of teams, both at the customer frontline and at his executive committee level. He shifted “teamwork” from the nice-to-have state on his list to top priority. Taking a page from Amazon’s book, he realized that the various systems of the company needed serious “management APIs” (functions and procedures allowing computer systems to exchange information) to complement systems APIs. Whenever a functional director changes his or her processes, the CEO supports in-depth discussions until other function heads understand how this will affect them and how to interface with the changed process.

Twain Never Said That

Third, share and test hypotheses rather than declare intentions. As discussions in the obeya room gain maturity, it becomes increasingly apparent that the function of the room is to spell out assumptions and test them. It’s not what you don’t know that gets you in trouble, but what you know for sure that just ain’t so (did you know that Mark Twain never actually said that?). People naturally express themselves with intent: I’m going to do this, I want that to happen. This immediately creates defensive reactions from others involved. Expressing assumptions and testing them makes for much more effective – and sincere – communication about what we understand about the situation and how we could handle it.

In answer to your question, yes, I believe that A3s and obeyas are essential elements of lean management, particularly at the executive level. I also believe that the key assumption you need to test is whether the group using it is:

• Ready to share what they saw at the gemba, particularly on the customer coalface, or discussing boardroom theories.
• Intent to improve processes to make frontline teams’ work easier or content to just push the ball down the road to be seen as doing something whilst maintaining business as usual.
• Open to listening to unfavorable information and ready to change their minds by trying out pragmatic ideas and hearing concrete feedback from their colleagues, as opposed to using the problems they hear as ammunition against each other.

Attitude matters. In fact, obeyas and A3s can be seen as tools to support attitude change, and shift from management by pressure on results to management by customer orientation. Without this fundamental change in outlook, the risk of using these sort of tools is to add yet further pressure to siloed functional management and disengage teams even more than they are today. What makes all the difference here is that the CEO sees success in building strong teams through encouraging sincere communication, and supporting insights and initiatives. Without that, the obeya is just a room and an A3 is just a piece of paper.