Evolving Excellence has become a bit punchy lately, but this is because we feel that a critical debate is needed within the lean manufacturing community.
Paradigms, methods, and outcomes need to be challenged, as how we move forward may determine the future of manufacturing competitiveness in North America. We are sometimes being very blunt in asking some tough questions of individuals and organizations that we have tremendous respect for, but we believe we need to take a step outside of the box and look inward to ensure that our vision of lean is really "being lean" and not just "looking lean."
The debate began in May when we published a post questioning an article in Target by Jeff Owens of Delphi, where he describes how his company’s culture helps create excellence. By then Delphi had won many Shingo Awards for manufacturing excellence, but the company was already experiencing severe financial problems. In July my co-author Bill Waddell published a post on Steve Miller joining Delphi to ostensibly turn it around, however we noted that he did not have the background to actually attack the manufacturing side of the operations.
In October things started to heat up, with Delphi filing for bankruptcy on the 8th of the month. Jim Womack of the Lean Enterprise Institute sent out his regular missive, where he talked about Delphi’s lean activities and how they weren’t enough to offset "legacy" costs associated with union contracts and healthcare benefits. That got us to thinking… is Delphi truly lean? In a follow-on post we questioned that assertion… even though they had won many Shingo Prizes.
But what really got to us were the statements that lean was in place but couldn’t succeed due to the legacy costs. We’ve always believed that true lean requires lean management thinking, and therefore excellence in management. Leadership, planning, hoshin kanri… all are core to the Toyota culture. As we described in a later post, Delphi paid a shareholder dividend only months before declaring bankruptcy and they decided not to use their substantial cash reserve to buy out legacy agreements or shutter plants. They knew they had these commitments coming due, but they did not confront them and instead opted for bankruptcy… and an apparent attempt to join the hoardes of mis-managed companies chasing low labor rates instead of internal waste reduction. That is not excellence in management, and definitely not leadership.
This led us to ponder the difference between "looking lean" and truly "being lean." Bill wrote a thought-provoking post on the issue, where he discussed the importance of looking outside of the actual assembly process. In early November the requirement of "lean management" to ensure lean success was discussed in this post, again with Delphi as a specific example, with a discussion of one culprit being the difference between Sloan/DuPont ROI-driven management and Toyota/Henry Ford cash-driven management here.
The debate grew louder at the AME Annual Conference in Boston last week, where Jim Womack was a keynote presenter. His presentation (view his presentation here, courtesy of LEI) was enthusiastically received, but also very sobering… which sparked a lot of debate with dozens of posts on forums such as NWLean. Jim’s remarks were interpreted with surprisingly large disparity… from a warning to manufacturers to a potential positive solution to pure gloom and doom.
Today Bill published a post reviewing a recent article in Manufacturing & Technology News, which discussed the apparent conflict between Delphi’s Shingo Prize awards and their business performance that led to bankruptcy. Shingo’s executive director, Ross Robson, falls back to using legacy costs as the excuse, thereby completely forgiving management. The plants that won Shingo Prizes had some great lean activities (although even Mr. Robson indicates one was unprofitable… how does that compute?), but lean is about leadership, culture, people… and profit. Eli Goldratt said The Goal of manufacturing is to make money. It’s hard to be excellent if you aren’t… even if you have supreme command and deployment of the tools.
Looking Lean versus Being Lean. How do we ensure that our lean programs are really focused on true lean? How do we avoid having manufacturers simply implement tools or simple training programs… aka "lean lite"? How do we align awards and recognition such as the Shingo Prize, and certification programs such as the excellent SME/AME/Shingo collaboration so that they reflect true excellence… and not an oasis of lean tools in the middle of a desert of inept management? Leadership is driving a vision throughout an organization, planning for success, accepting responsibility for failure, and making the tough decisions.
How do we create real Lean Leadership?
Start the debate and stay tuned. The next issue of the Superfactory e-Newsletter will explore this further.