July 1, 2012

Why Lean Fails

A top-down strategy is the only way Lean works

By now, the Lean story is familiar. A vibrant, well-managed Lean manufacturing strategy has the potential to double growth, dramatically cut costs by eliminating waste and improving processes, and boost operational profitability. Ask a room full of managers who is doing (or has done) Lean and most hands will go up. But ask whether these programs are getting the promised results and the answer is generally, “No.”

Lean manufacturing has been the flavor of the month for so long that too many chief executives and managers are sure they understand it. Yet, after the workshops are over and the meetings and procedures established, months pass with nothing to show for the effort.

Why is a strategy that is meant to establish sustainable manufacturing itself unsustainable as routine operating procedure? The answer is simple and difficult at the same time.

Having researched Lean initiatives for almost two decades, I believe the challenge is becoming Lean, not doing Lean. “Becoming” Lean is a change in attitude, mindset and orientation—a continuous effort that must start with the CEO. “Doing” Lean is walking around the factory floor, holding meetings, forming efficiency groups and changing floor processes and procedures. But the latter will fail, and does fail, without the former.

So often leaders assume Lean is a program, something that can be implemented to improve the bottom line. But if the chief executive does not understand that Lean is a business model, not a manufacturing tactic, little will ever happen. Inevitably, a Lean program started at the middle-management level, even as high as site manager, produces slow or non-existent results, because the next level of managers tend to assert their authority in ways that undo the good work of their subordinates.

So how does an organization become effectively Lean? First, the CEO must thoroughly embrace the following ideas: customer perception of value is the No. 1 priority, increased productivity is wealth, and great people are vital to making great products. Once a CEO recognizes these priorities and is convinced that Lean is the way to maximize these values in the company, he or she must find a Lean “sensei”—which means “master coach” in Japanese. By spending time on the shop floor together and focusing on the detail of the work, the CEO and the sensei can identify and prioritize problems, and develop the appropriate improvement methods.

If necessary, only the CEO needs to know the company is doing Lean. Usually the employees already know when a company has a lot of problems. On the shop floor, there is generally little resistance to making the workplace run more smoothly. However, a small group of employees may resist, or, just as bad, become indifferent to the changes asked of them if it is obvious there is little support or interest from the chief executive.

Senior executives who have mastered Lean say the same thing: It's a practice, not a theory. To be precise, it's a practice of onboarding employees on the shop floor using a four-step methodology:

1. Visualizing activities.
Create an environment where anyone can readily see the difference between optimal and suboptimal situations. This might be as simple as creating labeled pegs where tools should always go; when a tool is missing, it will be obvious.

2. Formulating problems.
Collaborate with operators to precisely define the problems they encounter. Do so by high- lighting the gap between what should be happening and what is really happening.

3. Seeking root causes.
When you encounter a suboptimal situation, you must ask: “Why has this happened?” And we must keep asking until the conditions that created the problem become apparent. This practice requires the kind of deep thinking that is carefully nurtured through observation and discussion on the shop floor.

4. Studying countermeasures.
Senior management studies the countermeasures that result from this process and apply these ideas and initiatives to the larger issues of the business. This is profoundly empowering for operators because they see their contribution to the larger organization. At the same time, senior executives develop deeper relationships with their people, as well as a smarter vision of how operational excellence can be turned into market game changers.

Employee development is the vehicle by which Lean goals are achieved. But only a committed and Lean-practicing CEO can assure that this development happens. As a CEO, it is critical to develop leaders who come up with their own plans and activities to achieve the results you need. So they must be trained one mind at a time. Of course, there's always the risk that trained employees will leave with their Lean problem-solving skills. But the greater risk lies in employees who are untrained and stay within the organization, adding to the problem rather than helping with solutions.

Lean results stick when CEOs have the guts to accept that Lean is a radically different approach to management, and the wisdom to understand that the promise of doubled growth by reducing customer complaints and customer lead-time can only be realized by self-development first.

Michael Ballé is the co-author of The Gold Mine, a bestselling business novel of Lean turnaround, and recently, The Lean Manager, a novel of Lean transformation. As a managing partner of ESG Consultants, Michael coaches executives in obtaining exceptional performance through using the Lean tools, principles and management.