In an interesting article from Bloomberg Businessweek, an investment outfit called Monomoy Capital Partners' kaizen hit team approach to obtaining "efficiency" in one of their investment portfolio companies is described in some detail. At first blush it reads like typical kaizen stuff with typical kaizen results – time from receipt of customer orders at Heat Transfer Products Group (HTPG) is cut from 13 minutes to 3 minutes. There is something unsettling about the whole thing, however, as you read about the process.
A team of former Toyota employees leads the effort, going from one Monomoy company to another – experts in the techniques but folks who deliberately ignore the whole 'respect for people' pillar … they understand very well that it has no application in the slash and burn world in which private equity bottom feeders like Monomy operate. Nowhere does the article mention anyone talking to any of the employees below the team leader level at HTPG to get their input. The kaizens are conducted by the Monomy hit team and managers from HTPG and other Monomoy companies. Even the Bloomberg Businessweek writer gets to make improvements, but not operators.
The lack of participation from shop floor people is probably related to the fact that Monomoy's results seem to be aimed primarily at getting rid of people – a goal usually tough to get the production people to sign up for. "In 2010, Monomoy cut 86 workers from HTPG’s payroll in Scottsboro."
The whole thing is rationalized by: "It’s a bright picture, clouded somewhat by the 150 jobs lost in Arizona when Monomoy closed the Yuma plant. If you add Yuma into the head count, the net loss at HTPG is about 75 people. The partners at Monomoy are not saints, and people are expensive. But if you cut costs through head count alone—and not by improving operations—you have to just pray the economy goes your way. To survive, you cut people. To grow, you cut waste."
Interesting theory, but it misses the whole point of sustainability. It misses the reason Toyota built the lifetime employment idea into the system, but the Monomoy guys aren't trying to sustain anything. They are in it to make a quick buck, and if the whole thing goes to hell in a hand cart s few months down the road, that isn't their problem.
"As I walk with Stewart, I notice tape on the floor that reads 'Top brazing cart #1.' It does not contain anything that looks like it might be a brazing cart. I see oil and water on the floor, too. A cart labeled 'closing cart' is a mess. I point these out to Stewart. 'TPS is an ideal state,' he says. 'We’re trying to get from a B-minus, C to a B-plus. We don’t have to hold this long enough to get to Toyota quality to get significant value.' I ask him whether this should worry a potential buyer. HTPG CEO May—and Farrister, a team leader on the line—both seem dedicated to the system. Yet on the plant floor, I can already notice it beginning to slip in places. Investors “aren’t going to look at it like that,” says Stewart. 'They’re looking at financials. They’re looking at 12 months of value.' "
In other words, who cares if none of this sticks – whoever we sell this to is not going to be smart enough to realize we are selling them levels of performance that cannot be sustained – that we are selling them smoke and mirrors performance?
Who cares are the people left holding the bag … people like those at bankrupt Barjan – a Monomy companythey 'turned around' and sold only to have it go belly up less than two years later in a trail of lawsuits and layoffs … and at Fortis Plastics, a company Monomy has 'improved' and liquidated.
So what's the takeaway from all of this? For one, reinforcement of the need to involve and commit to people if you want improvement to sustain. This sort of top down lean aimed at headcount reduction doesn't work, and can't work for any organization in it for the long haul.
And that just because someone used to work for Toyota and is steeped in their tools does not necessarily mean they are going to do things the way Toyota taught them to