Posted on August 19, 2009 · Posted in Leadership, Lean Thoughts

For years my colleagues and I have been telling our clients that 70% of all Lean transformations fail in their first attempt. That’s been our experience. I recently ran into another consulting firm whose records reflect that their observed failure rate is closer to 90% (86.4 to be exact)! Why do most organizations fail to sustain their Lean transformations? I offer the following observations based on my experience.

  1. CULTURE CHANGE vs. TOOLS: Many leaders perceive Lean (often with the guidance of well-intentioned consultants) to be a collection of nifty “tools” that, if properly executed, will drop their costs, improve their quality and shorten their delivery times. While those outcomes are all possible, few leaders recognize that a Lean transformation is about cultural change, not just tools; hence, many are unprepared to lead the transformation.

The “tools” approach can be hired out to mercenaries; not so a cultural change. Culture changes require the personal attention of the culture’s leaders.

Cultures are made up of people and people need compelling reasons to change. In the 1980’s Dr. Morris Massey stated that, after the age of 13, people only change when confronted by a significant emotional event (SEE). The message? Leaders need to create a significant emotional event to change their organizations. Some advocate the burning platform approach: “we’ve got to adopt Lean or perish.” That statement is more true than many realize and it can work, but no matter what approach they use, to be credible, leaders need to have their own epiphany, their own SEE. Only then can they lead the change of their organization’s culture.

  1. CHANGE TAKES TIME: Because cultures are made up of people, and because people change slowly, transformations take time. Most leaders are looking for the rapid paybacks that the use of Lean tools can provide; so, they neglect the fact that Lean comes from a culture (Toyota) that takes the long view. Yes, you can get quick paybacks, but to sustain them, they have to be part of a comprehensive strategy; not just a series of Ad Hoc events.
  1. RIGHT PEOPLE, RIGHT PLACE: One of the toughest challenges of a Lean transformation is coming to the realization that frequently the wrong people occupy seats of authority. They rise to their positions in various ways: some rise to power simply because they were there the longest; sometimes because they performed lesser jobs better than their peers; sometimes because they were friend to, or relative of, the person making the appointment; sometimes because they behaved sycophantically (‘sucked up”) to those who were in a position to promote them. Whatever the cause, the result is that they now occupy a position that steers the future of the organization.

The single largest reason that Lean transformations (or any change-based activities) fail is that managers scuttled them. This scuttling is usually done passive-aggressively, giving lip service to Lean’s practice while secretly imposing obstacles to its success. Even if you weren’t interested in a Lean transformation, this kind of selfish behavior is what creates organizational silos that lead to dysfunctional behavior: acting with self-interest rather than in the interest of company success. Such behavior cannot be tolerated as it engenders more of the same. It must be eradicated root and branch.

For some, counseling alone (a SEE) will get them back on track. Others, however, are too deeply entrenched in their behaviors to see change as anything but threatening; threatening to their control, threatening to their sense of power, threatening to their psyche. These, sadly, must be eliminated for the health of the organization.

Once they are gone, the right person must be sought. That person must, by all means, be able to perform the functions of the post, but equally importantly, they must be able to see their role in creating an organization aligned on customer satisfaction and relentless change for the better.

Only when the right senior people are in the right places will the organization be ready to pursue their Lean journey. For this reason, the vetting of senior personnel must be at the beginning of the critical path toward any effort to change. I would strongly suggest the use of a disinterested third party to perform this vetting as they come without most of the prejudices that could skew their recommendations.

Similar vetting will need to occur throughout the organization and obstructive personalities eliminated wherever they exist; however, once the right senior people are in place, the transformation can begin in earnest.

  1. LEADING LEAN IS REAL WORK: For Lean to be sustainable, leaders need to develop an overarching Lean strategy within which the “tools” are only a part. This strategy needs to be cascaded down through the entire organization and performance expectations created around it.

The cascading of expectations creates a linkage that bonds the entire organization in a common journey. It eliminates silos that so often create impediments to overall success. No one but the leadership team can do these things; so, rather than being passive overseers of their transformation, as some might suggest, senior leaders need to exert real effort to breathe life into their Lean makeover. Moreover, they have to require real work of their entire chain of command.

  1. TOP DOWN IMPLEMENTATION: One of the key reasons that transformations fail to sustain is that they rarely start at the top. By that I mean: leaders only infrequently go through the critical effort of getting trained, then training their direct reports, before launching into the use of Lean tools. The result? They lurch into an approach meant to grab the low hanging fruit and the bottom-line-infusion that accompanies such harvesting methods. There may even be a subconscious plan to make their firm look good, even if only temporarily, as a way of making themselves look good.

Transforming an organization is an important feat, but the goal is keeping the organization Lean. Those who have read “Good to Great” understand that data all point to the fact that success takes unselfish (level 5) leaders committed to the long-term goal of transforming their organization for the better.

  1. ALIGNMENT: Transformations frequently fail to address alignment: everyone working together toward the same goal. That failure allows silo owners to continue shortsighted practices that suboptimize: make their organizations look good at the expense of both their colleagues and the overall company, sometimes even customers. While the senior leader (Champion) may be white hot, I have found that they often fail to hold middle managers (including those immediately below them) accountable for embracing Lean. Middle managers are often allowed to be uninformed, and in that state, to seriously frustrate the forward progress of the transformation.
  1. KAIZEN vs. HOSHIN KANRI: All too frequently, transformations take the form of a series of Kaizen Blitz events, often without the benefit of a Value Stream Map. These Ad Hoc Kaizen events, no matter how well intentioned, will never sustain a transformation.

Instead, the leadership team (comprised of the champion and his or her direct reports) need to form a Lean Council and go about the task of creating an overarching Lean strategy. This Hoshin Planning or Policy Deployment process needs to embrace the following tasks:

    1. Developing clear metrics tied to important “customer focused” concerns like:

i. On-time delivery

ii. Flawless quality

iii. Lowest cost of ownership

iv. Speed of adaptation to market changes (e.g. implementation of engineering changes, introduction of new products, etc.)

v. Market leadership (defining the “next” product or service)

    1. Creating alignment by cascading those metrics down through the organization
    2. Requiring all levels of leaders to chart (using run charts), post and explain their organization’s performance against their metrics on a no less than monthly basis
    3. Holding the chain-of-command accountable for monitoring & counseling their subordinates’ progress against their metrics. This is especially true at the Lean Council level where subordinate leaders, having problems meeting their metrics, should be brought to explain their problems and concerns. Likewise, those doing exceptionally well should be brought in to discuss practices that helped them do so. These “Best Practices” then get shared so that the entire organization can benefit from them.
  1. TRAINING: One of the areas to which leaders commonly give short shrift is Lean training; not just at the hourly level, but especially within the ranks of leadership. Leaders can’t lead if they don’t know where they’re going, so they, like every level of the organization, need to understand Lean. This, too, creates a form of linkage that aligns the organization in a common understanding of where they are going.

While some might argue that the higher up the organization one ascends the less training they need, I’d argue the opposite. Leaders need to understand Lean so well that they base the very way they lead around Lean principles. Leaders should be seen participating in Kaizen events. Moreover, leaders should perform some of the event-related training (SMED, Standard Work, 5S, etc). Lean knowledge, behavior and participation should be part of every performance evaluation.

If those on the Lean Counsel intend to underscore the criticality of Lean to their overall business strategy, they should kick off every event and should be the ones to determine (from the data they are reviewing) where events should be conducted. To do these things, leaders have to know Lean inside and out. Lean isn’t just another thing that they slap on their overflowing plates; Lean becomes the way they do business.

  1. KAIZEN vs. KAIKAKU: There has been a great deal of emphasis given to Kaizen methodology, but little to Kaikaku. Kaikaku, however, is critical to the Toyota method of implementing change. Kaikaku addresses the “systems” of an organization and is a more strategic tool than the charistically tactical Kaizen.

I like to think of Kaikaku activities as those which require long planning and preparation followed by rapid execution. Your New Product Introduction (NPI) methodology might be the first recipient of Kaikaku, but so might changes to (simplifications of) the organization’s policies and procedures.

For example, to reduce the complexity embedded in procurement practices, a group of stakeholders would be identified to conduct a Kaikaku event. Their long-term mission would be to examine the current procurement practices and pare them down to the important essentials (eliminate any waste).

When complete, the new practice would be Beta tested, modified as necessary, Standard Work created, training conducted and performance monitored. Only then, should the new practice be rolled out to the greater organization. Dependent on the size of the organization, that process could take anywhere from six months to a year. That may seem like an extravagance, but the savings in employee time and the streamlining of the procurement process are well worth the effort.

This same form of Kaikaku should be used any time new technology is introduced, either in manufacturing or in work tools like computers, software, engineering practices, etc.

  1. MANUFACUTRING-ONLY vs. ENTERPRISE-WIDE: Many begin their Lean transformations in their manufacturing (or core service) areas. That is fine, but it can’t end there.

Your organization is an organism. Like the human body, your organization depends on every part working in harmony. Just as you wouldn’t exercise only your arms and let the rest of your body become dissipated, you cannot have a healthy Lean transformation without getting the entire organization strong. It takes the entire organization pulling together to make your transformation successful.

  1. GO AND SEE (MBWA): Many leaders tie themselves to offices and their ubiquitous computers, but their offices are often the furthest place from the point where customers are pleased. Tom Peters referred to the art of visiting the real places where activities are done as “Management by Wandering Around” (MBWA).

Leaders need to understand the concept of Gemba (Real place) and then make a point of going there. If there is a problem with Customer Service or Human Resources, don’t make them come to you and dissociate their issues from the place where their issues exist; go to them, the “real place,” and “see” what is really going on.

  1. MENTORING: Few practice this technique that has its roots in the craftsman era, when the apprentice (protégée) was taught (mentored), step-by-step, how to perform a task. Somehow we’ve lost that important practice. Now, rather than growing people to assume the next level of performance, managers tend to use the Darwinian practice of self-selection: advancing those who do the best job of figuring it out for themselves. That practice usually leaves the majority of the organization underperforming.

I have watched countless organizations flounder when they lost their Lean Champion or another critical leader. Because no one had been prepared to assume the vacated position, the firm was forced to go outside to fill the slot. That demoralized the folks who felt they were candidates, and they often left, too. The entire organization was weakened for years, no matter how good the new person was. Why does that occur? Because leaders rarely take the time to “build bench,” to develop his or her subordinates.

Bench-building seldom takes place overnight, so keeping a leader in place until it has happened is vital. Mentoring is such a critical skill that one of the keys to further advancement should be a leader’s skill in building bench. That skill can actually be measured by creating a skills matrix of the skills necessary to fill the leader’s shoes. Subordinates are measured (by disinterested third parties if appropriate) for their possession of these skills.

If critical skills are lacking, the employee’s annual review process should draw attention to those skills and make training available. While training alone does not assure the employee of promotion, he or she will not be allowed to advance without it.

Sustaining Lean is really quite simple if you think about it. It only requires the use of good leadership principles; but, it’s not a task achieved overnight and not every consultancy, including your own in-house team, is prepared to help you achieve that goal.

Irrespective of who you engage to help you in your transformation, I strongly encourage you to be discerning consumers and to ensure that their goal is to leave you able to sustain what they helped you begin. If your whole leadership team isn’t being engaged, chances are very high that your culture will reject Lean as soon as the consultants leave.