What can you do when the remaining operational improvements for your building are locked up inside of tenant spaces? Ask “Why?” A transcript is included below, and here’s a link to the recording:
In this recording, Sara tells us how applying the 5 Whys problem solving method–a component of Kaizen and used by companies like Amazon.com–boosted operational efficiency within a specific Kilroy building’s tenant spaces. As a result of its improved energy use profile, this Kilroy building’s Energy Star score is now just high enough for Energy Star certification!
If you have suggestions on other topics we should be exploring, please let us know.
Millen (Gridium): Hello everyone! Welcome to our conversation with Sara Neff, Senior Vice President of Sustainability at Kilroy Realty. We’ll be discussing Kilroy’s innovative application of what’s known as the 5 Whys Method, which is a component of Kaizen and Continuous Improvement and is used at companies like Amazon. Kilroy’s application of this resulted in creative funding for LED lamps inside tenant spaces.
Okay, quick introductions! Sara?
Sara: Hi everybody! My name is Sara Neff. I am the Senior Vice President of Sustainability for Kilroy Realty. So I run all of our sustainability programs here from our existing portfolio, which we’ll be talking about a little bit today to our development, to all of our industry engagement and disclosures.
Gridium: Great, thanks. Hello, my name is Millen Paschich. I’m with Gridium. Buildings use Gridium software technology to lower energy costs, coordinate operations, and delight tenants. Of course we love talking about modern software for data-driven buildings and we’re very proud of our work with Kilroy.
So, let’s jump into a quick agenda. This conversation will cover three things: What is the 5 Whys Method, Sara will run us through the Kilroy case study on LED lamps inside tenant spaces, and she’ll wrap with key learnings.
How does that sound Sara?
Sara: That sounds great!
Gridium: Nice!
So, the 5 Whys Method is an iterative, investigative approach to problems.
Let’s orient ourselves to a story in 2004, where Jeff Bezos, the CEO of Amazon, visited one of their fulfillment centers and he learned of an incident involving an associate who had damaged his finger. So, the first question: why did the associate damage his finger? Because his finger was caught on the conveyor. The next question would be, okay: why was his finger on the conveyor? Because he was chasing his bag which was on the running conveyor. Okay, third question: why did he chase his bag? Well, because he’d placed it on the conveyor, which seems straightforward, which had then started unexpectedly. So then Jeff Bezos, the CEO, asked, “Alright. Why was his bag on the conveyor?” Well, because he was using it as a table. So the root cause of the associate damaging his finger was that he needed a table. So, Amazon kicked off a process of reviewing both the safety training, but also quite tactically, just providing tables at the appropriate stations.
So, how can this method apply to building operations? Well, let’s ask Sara. Sara, can you take it away?
Sara: Absolutely. Thank you so much Millen.
So, the teams at Kilroy are tasked with making their buildings more energy efficient. And we have capital budgets to do this, we have some expense budgets to do this, we have great engineers. But often at buildings is still energy efficiency left on the table, and so all the teams are empowered to go try to figure out what is preventing their buildings from achieving even greater levels of energy efficiency. And because it’s the teams who are empowered, I’m very happy to say that this case study is not about an innovation that Sara had; I am not responsible for this. This is one of my property managers…
Gridium: Cool.
Sara: …she’s a great property manager. She runs some buildings in Seattle and most of her buildings are certified Energy Star – great stuff – but she had one building on a campus that really just was kind of lagging in terms of energy efficiency and it was frustrating her. She’s a go-getter kind of gal. So the question that she asked of her team was “Why is this building not more energy efficient?” So, that was the first question.
And the answer to that question was, “Well, we’ve done everything we can think of, that we can afford in the common areas, but we’ve noticed the tenants haven’t changed anything about the way that they consume energy at all.” And this is often where the conversation ends. “Well, the tenants aren’t doing anything. It’s just ‘cause tenants don’t care about energy efficiency. They’re not focused on this… let’s just give up here”, but the team kept going. And that’s the important thing, you can’t just give up right when you get your first answer. So, in the Amazon example, Jeff Bezos didn’t give up when it was, “Well, because he got his thumb caught on the conveyor belt.” That could’ve seemed like the answer, in which case some safety training would’ve been probably what he would’ve prescribed; but actually, there’s probably some preventative measures that he would have never discovered.
So, in this case, tenants have not changed their energy usage and the team kept asking, “Well, why is that?”
Well, the answer is that the tenants haven’t done any energy efficiency improvements. They haven’t changed their behavior, they also haven’t improved their spaces. A lot of these tenants still had some CFL lighting that wasn’t particularly energy efficient anymore. And so they hadn’t been doing an upgrades. And this also may seem like an obvious answer – and we’ll go into a little bit of why that’s an important part of Kaizen – is your answers should be fairly obvious – but, the team kept asking, “Why is it that they haven’t invested in some upgrades?” And so they went ahead and asked why that was.
So you can go to the next slide, which was the Lehman Brothers picture: no cash. The way that this particular tenant was setup is that the tenants had the ability to pay for the building common area maintenance charge, which is assessed on a regular basis, but as far as other monies for facilities upgrade, that’s just not something the tenants had in their budget. They had no way of paying for something upfront, in terms of energy efficiency.
Gridium: Is that often the situation you find with tenants, where there isn’t additional funding available for upfront energy efficiency projects?
Sara: It absolutely depends on the lease structure. So this is not a universal example. We find this to be the case a lot, for example, in San Diego. In San Diego, a lot of our tenants have their own electricity meters and there’s a common area meter. I don’t even know if that’s true about but other landlords in San Diego, that happens to be true about us. We have this situation sometimes in Seattle, as in this example. I see it not at all in Los Angeles and San Francisco. So, it really depends. You know, the “why aren’t tenants doing energy efficiency?” sort of 5 Whys Method will leave completely different results with different tenants.
Gridium: Okay.
Sara: So, they asked themselves, “Okay, well let’s figure that out! How can we think about solving that problem? Would it be possible? Why is it that you can’t do energy efficient investments?” “Well, we don’t have the ability to spend money upfront on that kind of thing.” Well, okay. So this building at that point decided that, “Well, can we, the building, pay for your energy efficiency upgrade and then charge you back in the common area?” (Maintenance charges) So, you’ll see that’s the little Boston Commons here to tell us all about common maintenance charges. And in fact, the tenant said, “Yes, absolutely! We would love it if you bought the LEDs for us! And then you can charge us back later for them.” And the building said, “Great!”
And so, the building decided “Yes, we can help! We can solve this problem.” And they went ahead and did a lighting audit, purchased the LEDs for the tenants, put them in, charged them at the next time that they were going to be assessed their TAM charges and the lighting retrofit was done. And that program has been very successful in the building.
They’ve done about 50% of the lights; obviously, the tenants have to “okay” this, so about half the tenants have, which is pretty exciting. And I’m happy to say that just a couple weeks ago, the building finally nudged up in its Energy Star score and it’s now Energy Star eligible. So, we’ll be getting it certified at the end of this month. So…
Gridium: Congratulations, that’s awesome.
Sara: Oh, thank you! I’m very, very proud of the team. I can take absolutely no credit for this. That’s what I like best about it.
So, I think at all of these points, the questions seemed fairly obvious and the answers seemed fairly obvious. Why isn’t the building more energy efficient? Well, the tenants aren’t doing energy efficiency. Well, why aren’t the tenants doing energy efficiency? Well, they haven’t paid for any upgrades. Well, why haven’t they paid for any upgrades? Well, they don’t have any ability to pay for them upfront. Well, why? Well, they’d have nothing in their budgets. They have no sort of line item for that. And then some solutions were suggested, from that. So, I don’t think that’s something that the building would have come up with if they hadn’t sort of kept asking. So, at no point in this process is anything particularly ground-breaking.
So, when we’re now into “Key Learnings”. The thing we find with this method is everything should feel a little bit silly. Sort of a level of which things are not so philosophical that the answer should be pretty darn obvious.
Gridium: That’s right.
Sara: And if the answers aren’t obvious, you know… things have gotten sort of too philosophical kind of too quickly: why aren’t tenants doing energy efficiency? Well, the political climate means that people don’t care about global warming. It’s not a helpful answer. It’s let’s get down to the practicality of it. And in the Amazon example and this example, everything stayed very, very, very practical.
Another key learning is that this is best done by a team. A single person can do this, and I think that’s quite helpful, but you’ll get better ideas if some people sit around in a room together and do this because people might answer the “Why” question differently. And then a range of solutions could be suggested.
And then the other important thing about the learning is the process without an end. You know, there are always new problems that can be solved with the 5 Whys Method. So, remember that things should feel fairly mundane, better to do a team, and don’t stop after you’ve had your first success – are the key learnings from us.
Gridium: Great. Well, that brings us to the last piece of this conversation Sara, which is some resources for the reading, if folks are interested.
The first, we’ll direct y’all to is the Kilroy Sustainability page. The link is shown here at the top. And then GRESB digs a little bit deeper into the case study here that Sara just ran us through in getting LED lamps inside of tenant spaces – that case study is the second link. And of course, on the Gridium blog, we have some content about data-driven building operations. And lastly, we’ve got a link to the Asian Development Bank which introduces the Amazon case study for the 5 Whys and otherwise talks a little bit more about the 5 Whys technique.
And with that, if you have any questions, Sara we’ve got your e-mail address here.
Sara: Yes! I love questions. Happy to answer more about this. I’m really excited. Change management is sort of one of my big things that I love working on here at Kilroy and so happy to talk about more about how you can motivate people to use this technique and actually get some results.
Gridium: And same for Gridium, our e-mail info@Gridium.com is here. And basically that’s a wrap on this conversation. We’d like to thank Sara for taking the time and please follow up if y’all have any questions. Thank you!
Sara: Thank you very much! Bye.
