Guest author today is Cash Powell, Jr. of the University of Dayton’s Center for Competitive Change.
When Orrie Fiume, then Executive Vice President of Wiremold, asked Chihiro Nakao their Japanese sensei of 10 years, “How far along are we in lean?”, Nakao answered with a metaphor and a grin:”starting in middle school.” Wiremold is one of the American early lean success stories, documented extensively in Womack and Jones “Lean Thinking” pages 90-110.
If Wiremold, with its success, was only in middle school after 10 years, where is your company after say three to five years? After twice reviewing in a five year time span several companies on the road to lean, here is what we find they need to do to get out of the first grade.
1. A Staff Program
Company leaders should understand and accept that lean is a revolution in organization/management thinking requiring many years of hard work by the entire organization. It is not a “program” to be implemented only by technical staff. Consequently, the associates need to be trained and included in the transformation so they know what the Sam Hill you are talking about. In the 1960’s, we saw ads for “Operations Research” technicians; in the 1970’s, for “MRP Experts”; in the 1980’s for JIT experience; in the 2008’s, Six sigma belts. Technical staff stay a couple of years, are promoted or get better jobs elsewhere and any improvements become short term and non-sustaining without the associate participation. When anyone in the company says “how do you sustain the gains”, that is the kiss of death. In a company truly on the lean journey, sustaining the gains doesn’t come up.
2. Return on Investment
The road to lean is not a financial venture. Financial metrics do need to be focused on cash, the reduction of errors, reduction of all cycle times and work flow. The road to lean is not a focus on return on investment but a company transformation to a higher ground of cultural achievement. Selecting “projects” and doing blitzes based on ROI as the determining factors and only goals for the journey, is a kiss of death. Nothing inherently wrong with knowing ROI as short term bits of data, but looked at in the traditional, short term “payback” objective is applying the “batch and queue” thinking to the long term organizational strategy of lean. The success metrics lie elsewhere.
3.Acquired by Experts
Companies on the lean road are sold and the buying company crashes its own kindergarten ways down on the acquired company. Although recovery is possible and has been done, the acquired company may not recover any time soon. Corporate arrogance from what Doc Hall calls the “master/slave” mindset is the kiss of death. When did “we are from corporate and we are here to help you” ever work?
After spending millions on sophisticated software, a company with little lean understanding will implement the excruciatingly detailed transactions throughout the entire organization in search of “control.” Computer systems are vital to managing our business and personal affairs, but a lean company bent on simplification of work flow and transactions has to determine that information systems always did follow the process, not the other way around. Simplify the process also means simplifying the information systems. Complex information systems are designed around complex transactional processes. We have to step up to the fact that four or more decimal places has little to do with control; recording every movement of work flow, office or factory, is a strong suggestion that the process needs to be simplified to take out cost and not detailed further. Continuation of the traditional transactional batch and queue thinking is the kiss of death to getting out of the first grade.
Some companies do great work in starting down the lean road. They run the first lap in record time, maybe, call people in to benchmark but later, through a lack of understanding of the length of the journey, or a change in management, don’t realize that it is a four lap introduction – just to get started. Such companies say how do we sustain the gains and are not sure where to go next. If such companies engaged the entire organization, continued with ongoing training, the opportunities to improve would stack up and sustaining the gains would not come up.
Ten years from now I DON’T expect many CEOs will be saying, “we don’t care much if we maximize our lead times, continue with wasteful methods because that is our history, process our work in very large batches because that was always efficient, spend minimal time on continuous improvement because workers have to make parts, hold training costs down because training ROI is hard to measure, dump our factory waste into the river because it is cheap, and lobby for more lenient laws on air pollution.” If our prognosis is correct that we don’t expect to hear much of that from CEOs of the future, then when are we going to get started toward middle school?