Without a strong, consistent plan for cultural change, an organisation is likely to see its improvement programme fail in no time. Author Larry Rubrich, based in Forth Wayne, Indiana, suggests a model for successful lean implementation that builds on important elements of lean thinking: planning, concepts, tools and culture.
American organisations have difficulty sustaining lean improvements in order to achieve any real business results. While often there is a spurt in activities and improvements early in the implementation, this slows down and stalls when the organisation begins to realise that:
- Lean is not a “magic pill” or “silver bullet” for its problems;
- A lean implementation requires difficult and company-wide change, especially for top management;
- Not everyone thinks lean applies to them (i.e., sales, engineering, IT, accounting, human resources, and other key areas);
- Quick bottom line results do not appear, giving rise to questions about a payback from the investment in lean;
- Top management support for the change necessary to implement lean is limited or missing.
To avoid the failure of our lean initiative, we must view and acknowledge lean as the “business operating system” by which we will run our entire organisation and achieve our desired results. Lean is not just a set of tools that we use in our operations – for example, 5S or teams. Achieving our “desired results” means we are focused on the three key metrics by which all “for profit” companies are measured: profit, cash flow, and revenue growth. The linkage between desired results and lean is accomplished using policy deployment. Lean tools are only deployed when we understand how their use will help us eliminate the wasteful activities that are preventing us from achieving the desired results.
The idea of adopting lean as an operating system in all US organisations attempting to improve their operations has been very difficult to materialise because it is rarely understood as an absolute requirement to a successful implementation. This has resulted in an extremely low level of lean success as measured by either the ability to achieve “World Class” (globally competitive) status or significant improvement, for an organisation’s activity.
The September 30th 2011 edition of Manufacturing News magazine presented an article entitled Lean and Six Sigma Are Not Leading To Breakthroughs In Corporate Performance. This article, the result of a survey of 100 business executives conducted by AlixPartners, a consulting firm, highlighted some problems with lean and six sigma implementations including:
- 70% of organisations reported a less than 5% improvement in manufacturing costs as a result of lean;
- 60% said their previous lean improvements were not sustainable;
- Only 17% reported seeking long-term culture change.
AlixPartners made these observations:
- Most companies are getting a poor return on their investment in lean and six sigma;
- Companies are far too focused on implementing lean tools and processes rather than on basic execution;
- They need to dramatically rethink their lean strategies—focusing on cash and finding the biggest opportunity to improve and then deciding which tool(s) will help them achieve that result;
- Leadership teams must take responsibility for the implementation, rather than trying to push this responsibility down to the facilitator.
This article supports information previously reported by Industry Week Magazine that 74% of American businesses, who indicated they were using lean as their business improvement activity, reported “little” or “no progress”. Toyota purportedly says this number is 70%.
These businesses view lean as an add-on; something we do in addition to our normal busy schedules, not as the operating system by which we run the organisation and achieve our business goals. This lack of progress leaves organisations saying: “We’re different, lean doesn’t work for us,” thereby placing the lack of results on lean itself rather than the organisation’s implementation plan.
LEAN AS A SYSTEM
World Class business results cannot be achieved without the deployment of lean as a system throughout the organisation. Lean thinking is the elimination of waste to achieve our goals, and it must saturate our company-wide discussions and activities.
Lean as an operating system has four components:
- Lean planning—linking business goals with lean activities: policy deployment;
- Lean concepts—eliminating waste to improve the flow of information and material;
- Lean tools—the techniques used to eliminate the identified waste;
- Lean culture—building a positive working environment.
However, before tackling the four components of lean implementation, leadership (the top facility manager and their direct reports) starts by asking themselves, “Why do we want to do lean?” The expected answer is, “To create an organisation that works safely, and makes money (the desired business results), while delivering more value to our customers than our competitors.”
These components are shown on the chart below.
THE FOUR COMPONENTS OF A LEAN IMPLEMENTATION
Lean planning. This order of component implementation may seem incorrect to current practitioners. This results from our tendency to jump to the tools first. However, the roadmap to using lean as a system and becoming World Class begins with the end in mind – planning. This ensures we are not using lean as an appendage to our organisation, but as the system to accomplish our goals.
Lean planning insures the tools we use, and kaizen events we accomplish, are tied into achieving our goals. To do otherwise is to risk doing “drive by” or “spot” kaizen events, which may not help secure the future as envisioned by leadership.
Lean planning also includes the leadership team jump-starting the culture change process by issuing organisational guiding principles, behavioural expectations or what are sometimes called “codes of conduct”. Behavioural expectations or codes of conduct are short statements displayed throughout the business. These statements are “a set of rules or standards” that members of the company use to guide their behaviour and actions. Behavioural expectations define the cultural aspects of “how” people do their jobs. They provide a cultural framework that is filled in during the implementation of the fourth component of lean – culture.
The Wiremold Company, an often used example of a very successful lean implementation in the United States, used a code of conduct statement to reset the Wiremold culture at the start of their “do or die” lean journey.
CODE OF CONDUCT
Tell the truth
Try new ideas
Keep your promises
Do your share
Lean concepts. This is the understanding that waste stops or impedes the flow of information and material. The concept of flow is critical since it, or the lack of it, determines the lead time for our product or services.
The flow of information includes the “information or knowledge product” that is produced in the transactional areas, which in turn includes producing sales orders, drawings, work orders, and other information products required to support the production of the physical item.
Lean tools. After the creation of organisational goals using lean planning, and the understanding of how wasteful activities prevent the achievement of those goals (lean concepts), the discussion can now turn to understanding the tools. These, as shown in the previous chart, serve two purposes: identifying the waste that prevents the business from reaching its goals, and providing a tool for eliminating or reducing the identified waste.
For example, the sole purpose of value stream mapping is to identify waste. The remaining tools are then used to eliminate or reduce the waste that was identified in the VSM.
Lean culture. Lean as an enterprise-wide system can only be built on the foundation of a changed culture. Organisational culture is a learned process and is developed by the business as a response to the working environment established by the leadership and management team.
Lean culture is the component that makes it all happen, the component that musters the company’s most important resource—its people—to create an organisational “war on wasteful activities.”
The only major competitive weapon an organisation has is its people. Most organisations do not have a lot of patents or technology that can protect them from their competitors or create barriers to entry into their markets. Generally speaking, it is the people who make the difference.
Developing a lean culture begins with the development of an organisation-wide code of conduct or behavioural expectations as noted in the planning phase. Because the principles and expectations are developed by leaders, these set the framework to be filled in by the following elements:
Every organisation has a culture, whether leadership-guided or self-developed. Culture can have a positive or negative effect on the company’s performance.
If we view lean as our operating system, with people at the center of our lean and continuous improvement (CI) activities, then we must view our HR department and our company culture as important components in the development of this operating system. Human Resources should integrate lean in areas like: performance appraisals; candidates for promotion; merit increases; hiring recommendations; and new employee training.
Additionally, HR should be responsible for monitoring the completeness of the communication and empowerment plan. Part of this evaluation should rely on the use of an outside survey.
Unfortunately, most organisations do not utilise HR as part of the company’s culture building activity. The company culture is left adrift to develop on its own and HR is relegated to hiring, firing, and keeping us legal. Have you ever seen any Certified Lean Facilitators that have come from HR?
To successfully and sustainably implement lean, a company must be in balance. It must achieve the correct balance when it comes to planning, understanding concepts, using the correct tools, and empowering its workforce by creating a lean culture.
To avoid the failure of your lean programme, it’s critical that all the components are in place.