And now for the most ridiculous item of the day…

The U.S. Patent Office approved the trademark "Lean Procurement(TM)," a strategic service and approach developed by New England industrial product distributor Consumers Interstate Corporation. "Lean Procurement(TM) is a strong complement to companies’ other lean manufacturing efforts," says Kenn Fischburg, President of Consumers Interstate. "It applies similar strategies to cut the fat and build lean muscle and smooth flow in this often overlooked area of procuring their supplies, which involves activities from inventory control to accounts payable. But it’s not about continuous improvement: it’s a powerful rethink and redesign of the whole procurement process; that yields dramatic results, top and bottom line.

Demand Flow (TM), Lean Six Sigma (TM), Lean Procurement (TM)… where will this idiocy end?  What a load of hooey.  No wonder consultants get such a bad reputation. 

At least I call dibs on "Demand Quake (TM)."

Our occasional guest author Dan Markovitz has an article in the latest Industry Week titled Get Lean Get Innovative where he discusses a common problem in business: finding time.  Finding time to firefight problems, attend meetings, resolve to customer issues, and if by some miracle there’s some time left over, then finding time to innovate.

We’ve all heard the stories of how some exemplary companies stimulate innovation, and we wish we had that luxury,

Google, for example, is well-known for its "20% time," in which employees are allowed — even encouraged — to use 20% of their time on offbeat projects.

3M predates Google in this approach. The company has a similar "15% rule" that encourages technical staff to work on projects of their own choosing. And it offers venture capital-like "Genesis Grants" of $50,000 to for researchers to develop prototypes.

Chiquita picks its best people — even pulling them out of areas where they’re contributing — and tells them not to worry about the day-to-day business, but rather to think about how they’re going to make their quota in two years. Similarly, Lockheed Martin is legendary for its Skunk Works. The company built an entirely separate facility to house people they feel can dream up breakthrough innovations.

Other companies devote Friday’s or the last hour of each day to "innovation."  But how does a typical company do that?  How do they find the time?  That’s where lean, and especially the non-manufacturing aspects such as lean office, can help out.

Lean isn’t just about reducing defects and WIP. It’s about finding better ways to work. It’s about eliminating waste of all forms.

Take a close look around your offices, and spot the waste. See the office that looks like Katrina just hit? Calculate the time squandered searching for a file in that mess — time that could be spent innovating. Think the 8,000 messages in someone’s email inbox is just a hassle for the IT department? Imagine each of those emails as inventory, an inventory of ideas that’s not flowing smoothly down the value stream to the customer, an inventory that’s impeding innovation. See the multi-tasking rampant in your workplace (often caused by you, by the way, when you interrupt with a sudden question.) Think of the inefficiency caused by those interruptions — a loss from 20-40%, according to a study by the University of Michigan and the FAA — and think of the innovation that could have been occurring.

Implementing lean in the production environment will shorten cycle times, improve on-time delivery, and improve quality.  That will reduce the amount of time spent firefighting customer service issues.  Similarly, apply lean methods to development, office, and administrative activities will reduce the time spent filing, finding paperwork, and even making decisions. 

You’ve just found some free time to focus on the future.  Read Dan’s entire article here.

Kevin and I have hammered the ‘Innovation’ fad pretty hard lately.  Too often innovation seems to be pursued by companies which have utterly failed in their manufacturing efforts and now plan to invent their way back to profitability.  More often, companies package some simple change they make to their products or process in an innovation wrapper and announce it to the world as the most startling innovation the world has seen since sliced bread.   Credit must be given where credit is due, however, and when true innovation intersect with lean manufacturing, the results are nothing short of breathtaking.  Such is the case with Bemis Manufacturing.

Bemis is a family owned injection molder based out of Sheboygan Falls, Wisconsin (a state that seems to pop up more and more as the home of lean manufacturers).  Bemis has been on the lean path for several years and, while privately held companies do not publish their financial results, their growth rate indicates that they have been very successful.  They make all sorts of things, but their proudest claim to fame is that they are the world’s largest manufacturer of toilet seats.

Most people think that innovation requires advanced technology and microprocessors, and that just about every bit of improvement has been wrung out of the more mundane products in life – like toilet seats.  Bemis has shown them to be woefully mistaken, however.  They have just rolled out the first toilet seat that automatically closes when the toilet is flushed.

Dropping this amazing, innovative product into their lean manufacturing machine is certain to change bathroom technology forever and the world we live in.  It will spur a huge cultural transition.  Gone will be the days of women complaining of men failing to close the toilet.  No more dogs drinking from toilet bowls.  There are many people naively unaware of the fact that every year, an average of four children under the age of five drown as a result of falling into toilets.  Those dangerous days are over.  The world will be a different – and far better – place.

In the last several months I have read countless articles about innovation and almost all have left me overwhelmingly under impressed.  However, this bit of innovation is another story all together. I should have guessed that a lean manufacturer would be the first true innovator among them all.  Hats off to Bemis Manufacturing.

You can tell that I’m a manufacturing guy without a lick of sense when it comes to marketing.  If I were smart, I would change the name of my business from Best Manufacturing Practices to The Lean Sigma Kaizen Event Innovation Company and triple my fees.  It seems that every time I come across a lean disaster, there is a ‘lean sigma innovation’ outfit behind it.

Take for instance, the Smith and Wesson Company – the gun people.  They are under new management and growing rapidly.  Most of their growth is coming from the ‘Buy American’ spirit – especially when it comes to security.  They are reclaiming the law enforcement market, going back to the glory days when Clint Eastwood wreaked havoc on San Francisco with the "most powerful handgun in the world" – a Smith and Wesson product.  The problem is that they are also making a lot of noise about their ‘lean sigma’ strategy.  In spite of the fact that they take a month and a half to make a gun, they call their lean sigma journey a success.  More incredible, they explained poor margins during one quarter in the midst of their journey as the result of consulting fees for their lean sigma project.

That’s the kind of gig I need – one that pays me so much they have to footnote their financial statements to explain my fees – yet willing to call my efforts a success even if I don’t bring anything to the bottom line.

A company I am working with has paid over a third of a million dollars to a lean sigma consulting company for kaizen events – spanning almost a two year period.  They have nothing on the bottom line to show for it.  It seems to me that if I can’t pass on just about all I know about kaizen events in a whole lot less than two years, either I am a very poor teacher or I am working with a severely learning disabled client.  How can you get someone to pay you premium dollars to do the same thing over and over again for years?  I need to figure out the answer to that question.

Or there is the U.S. Army.  While there are plenty of solid lean practitioners in Army operations, the top leadership is not quite as astute.  They paid an outfit that cannot possibly fit the words ‘lean’, ‘sigma’ and ‘innovation’ into their web site any more for the brilliant advice that their lean sigma outcome should be a mandated unilateral headcount reduction.  What part of lean or six sigma does that come from?  How do you convince a client that a 5% across the board headcount reduction is ‘innovative’?

I think they have an ‘Emperor’s New Clothes" charade going.  After paying ridiculous fees, what CEO wants to tell the board and the rest of the world that the whole thing was a colossal waste of money that saved nothing?  Instead, they proclaim the whole effort to be a grand strategic success, and that the company is now more flexible and streamlined, then move on.  The lean sigma innovation advisers grab the quote, slap it prominently on their web site, then move on to the next CEO in need of some lean sigma innovation.

What stops me from pursuing the lean sigma innovation consulting route, however, is the same thing that stops everyone who really understands and commits to lean manufacturing.  I’m not in it for the money, nor do I see the CEO as my customer.  I’m in it for the manufacturing and for the people who manufacture for a living.  We measure success by the number of high value adding manufacturing jobs we have helped to save and sometimes create. 

CEO’s come and go, and so do fads like ‘lean sigma’ and the current nonsensical ‘innovation’ phase.  (I recently read an article in which Whirlpool – a real ‘lean sigma innovator’ if there ever was one – crowed about how innovative they were by selling refrigerators in India with smaller meat compartments and bigger vegetable compartments because India has a lot of vegetarians.  What they call ‘innovation’ the rest of the world calls ‘common sense’.)  On the other hand, lean manufacturing and lean manufacturing jobs are there for the long term.

Apparently every serious business article these days must include the word "innovation".  So I guess it’s about time I wrote something serious instead of the silly stuff up until now on useless topics like lean, waste, knowledge, and other sources of real competitive advantage.

Of course I’m being facetious.  We’ve taken many organizations to task for focusing on "innovation" instead of real fundamental change.  Companies like Ford believe they can innovate their way [forward] to success while maintaining a cost structure, grounded in unnecessary internal waste, that is at a 30% disadvantage to Toyota. 

But innovation is still important… it just won’t single-handedly create success.  A recent study pokes some holes in the myths and misperceptions of what innovation is, and it’s worth taking a look at their summary presentation given to the NSF.  As the authors summarized:

• What is innovation?  – not what we typically measure
• Who does it?  –  not whom we typically assume
• How is it done?  – not how we implicitly believe
• Who gains the most from it?  –  not who we often think

Of course that summary is intriguing, but really tells you nothing.  So I’ll expand a bit:

The data for the study crosses hundreds of firms, globally, across many industries.  The authors discuss some of the difficulties in obtaining good data on some metrics, and that need for improved metrics becomes one of the results of the study itself. 

Let’s start with the expected results:

• Importance is important.  No surprise.  The probability of an innovation being converted to reality rises as the importance of that innovation increases.  In effect, if the innovation is important enough, resources are applied to overcome even significant technological problems to convert it to reality.
• Experience counts.  No surprise there again.  Firms with deep experience can convert innovations more effectively.
• Speed can kill.  Taking the time to do it right yields more effective innovation conversion.
• More ideas lower the conversion.  Many of us have seen this phenomena at the micro scale with suggestion programs.  If you’re generating a bazillion small suggestions, so much time is spent managing the program that it often breaks down… and important suggestions are swallowed up.
• Innovations coming from outside of the U.S. are growing as expected.

Now for a few that may open some eyes.  Most people believe that smaller more entrepreneurial firms create most radical innovations.  Large companies can be encumbered by bureaucracy, having a "not invented here" culture, a fear of cannibalizing existing business, or simple technological inertia.  Small firms have more personal desire, but less resources.  But the actual results:

• The split of innovations is fairly equal, with 53% coming from outside of an organization and 47% from inside.  However the trend is strongly toward innovation coming from inside an organization.
• Also an even split between the size of the company… 58% from small and 42% from large.  Of course this can be viewed many ways, as there are far more small companies than large companies, but the group of large companies probably has more total resources than the small companies.  Perhaps because of this the trend is strongly toward larger companies creating most innovations.
• Firms dominant in an industry gain far more from innovation than secondary level firms.  This is part of the reason behind GE’s old mantra for "be number 1 or get out".

The presentation goes into considerably detail on the statistical analysis behind their findings, and I won’t put any more of you to sleep by commenting on it.  And there is some discussion on the traits of innovating organizations, but nothing really new: a tolerance for risk, a focus on the future market, willing to cannibalize, availability of product champions, and incentives for enterprise.

The bottom line is that innovation is necessary, it may evolve a little differently than expected, but it definitely does not assure future success.  You can’t innovate your way out of a waste-related competitive abyss.  Good luck, Ford.

CNN/Fortune (not to be confused with CNN/Business2.0, CNN/Money, CNN/Time… apparently CNN doesn’t do original content anymore) has an online article today on "Tearing Up the Jack Welch Playbook" that proposes that Welch’s rules are no longer appropriate.  Some of them, such as "agile is best" trumping Welch’s old "big dogs own the street" make perfect sense, and have been known to us in the lean world for quite some time.

But one of them is worth thinking about… "look out, not in" replacing "be lean and mean".  One quick glance at the detail for this change and you’ll notice a plethora of problems.  For starters, it has nothing to do with "lean"… it’s all six sigma.  In fact, the word "lean" isn’t even mentioned after the title.  We bump into the misunderstanding of the two concepts quite often, and as we know some consultants are trying to combine the two into a new way to make a buck, with one even trying to trademark the term.  Although in their defense they can be complementary methods.

Obviously the fundamental issue is that six sigma optimizes processes, and lean focuses on waste.  Six sigma alone can lead to the danger of optimizing a process that lean might tell you is not required in the first place.  Lean alone can remove waste but leave inefficient (but still value-added) processes in place.

So now we know that the article should really have been entitled "look out, not in" replacing "six sigma".  Let’s look into that a bit more…

The article claims that more than a quarter of the Fortune 200 followed Welch’s lead and dived into six sigma.  Of 58 large companies that announced six sigma programs, 91% have trailed the S&P 500 ever since.  Ok… why were those 58 selected (ok, that is "more than a quarter" of 200), and if that’s the population on which the 91% is applied, then why does 91% of 58 not yield a nice number?  Somebody apparently doesn’t know basic… err… stats.  Somewhat concerning when thae data comes from Charles Holland of consulting firm Qualpro, which as the article points out "espouses a competing quality improvement process".  Probably because they could no longer trademark "six sigma".  Actually a look at their website seems to indicate a methodology remarkably similar to classic multivariable design of experiments.

And I won’t even start with the problems with basing the data off of companies that "announced" six sigma programs as opposed to those that actually did it… let alone did it well.  Or all the other variables that could make a company trail the S&P 500 (but did they improve?).  I could say the same about lean… if I only had a penny for every company that "announced" a lean program.

The article points out that six sigma "looks inward", which is true in a sense.  So does lean.  In both cases it’s called continuous improvement, and it’s a good thing.

But I don’t think six sigma can be blamed for creating "an inward-looking culture" as the article proposes.  The article then links that supposed cultural malaise to a decline in innovation.  Aha!  "Innovation"!  Any business article these days apparently must include at least one reference to that most magical of words.  So… Jack Welch is now responsible for stifling innovation at all kinds of companies around the world?  That’s a good one.  From that great leap all kinds of canned quotes on innovation can suddenly be used to fill up the rest of the article.

Forget your wasteful and inefficient processes!  Go forth and blindly innovate!