I was at the Lean Enterprise Institute’s Transformation Summit in Orlando last week and had my world rocked by Bob Chapman, Chairman and CEO of Barry-Wehmiller.
Barry-Wehmiller is a $1 billion, 120 year-old capital goods company based in St. Louis, making a huge variety of packaging, corrugating, sheeting, and finishing equipment. They’re doing quite well, too, having seen a 21% compound growth in revenues over the past 20 years, and a 23% growth in share value (as they calculate it) over the same period.
These are impressive accomplishments to be sure, but what was truly impressive was Bob’s belief that
everyone at these conference focuses on tools like value stream mapping and 5S. But the tools are only 25% of the story. Lean is about peple, not about waste. Focus on the employees — all other benefits are just by-products.
In fact, he goes so far as to say that
the potential of lean has been sub-optimized by the focus on waste elimination.
Now, this is a nice sentiment, but it’s abstract. What does it mean? And how does focusing on people lead to reduction in waste?
Bob provided this concrete example: the company needed to reduce their worker’s comp insurance expenses a few years ago. Costs had risen drastically due to higher premiums and a few accidents. His first thought was to ask the HR department to figure out a way to lower the insurance expense. But as Bob told me later,
That’s not especially motivating: "let’s lower worker’s comp expense." How are you going to get people excited about that? And anyway, when employees hear that, the first thing they’re going to think is that we’re going to cut benefits.
Instead, he asked the company to form a team from multiple departments to
figure out how to get their coworkers home safely.
As Bob points out, this is a message that really inspires workers, because it’s about people, not about "waste." And as he says, lean is about people.
The results? In one year, costs dropped from about $180 per person to about $80. [I’m reading off the graph he presented, so I don’t have the exact numbers.] To put that in perspective, the industry average is about $200 per person. No talk of muda, no value stream mapping, just a drop of 55% in workers comp costs in one year. And as Bob emphasizes, this reduction of waste was the by-product of the focus on getting team member home safely.
It’s so easy to forget that respect for people is one of the pillars of lean. Barry-Wehmiller shows that this pillar shouldn’t be viewed as something incidental to the "real" goal of eliminating waste. Rather, it’s an integral part of lean that makes it all possible.