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Originally from the Lean Enterprise Institute – Michael Ballé 23/04/18

“As a CEO, lean has enabled me to renew our company’s profitable growth, so I love it. But getting my management team on board is a daily struggle. Thoughts?

Ouch. That’s unfortunately not uncommon, and a rather hairy problem in my experience. The tricky part of this problem is that you may well be, inadvertently, the source of it. Let’s take a step back and wonder: what problem where you trying to solve when you hired or promoted these people in their current roles?

Chances are that the sales VP is there because you needed someone to run sales: manage the sales team, deal with top customers, implement sales control and motivation systems, such as CRM, and so on. The manufacturing VP is probably there because you needed someone to run operations: move products or services, manage labor relations, control costs and investments. As for the purchasing VP, I’m not taking a big risk in thinking you hired him to manage the supplier base and get prices down. Or the finance VP: make sure you get clean year-end accounts and implement the IT reporting systems to do so. As when we get to IT … you get the picture.

As any CEO, I’m willing to bet that you:

  1. Designed functional boxes of what needs to be done to run the company (you broke down your overall vision into functional lumps needed to make it work).
  2. Inherited a bunch of processes on how each of these boxes run.
  3. Staffed each box with a VP, confident of their ability to run their box productively; deliver more with less.
  4. Required them to enforce compliance of your strategy on their function in order to achieve “disciplined execution.”

And … are probably discovering that although this way of going about it enables you to scale-up the company and build a large global organization, it’s also incredibly inefficient, cumbersome, and unable to adapt to local market conditions – and very wasteful.

Lean Management Differs Because …

The upshot is that when the product or service finally comes together through this functional machine, customers had better like it because that’s all they’ll get (because that’s all we know how to give them).

Now, of course, lean thinking starts from a very different premise. The core idea is “one-time customer, lifelong customer” – never lose a customer, as Jeff Bezos’ Amazon has demonstrated with a vengeance. This has three practical implications:

  1. An ever-broader range of products or services because as customers’ tastes evolve, you want them to find what they’re looking for in your company and not start experimenting with either someone else’s product or another way of solving their problem.
  2. Greater robustness of your product and service than competitors so that customers are not tempted to try someone else just out of annoyance or spite with a deal gone wrong.
  3. Reasonable prices so that customers feel they’re getting good value for money and are not (too) tempted to try a discount competitor just to see…

Indeed, most of lean is about this:

  1. Flexibility from just-in-time to be able to assemble different products or services on the same resources and to reduce lead-times by reducing batch sizes until everything runs on one-piece-flow. Last time I visited Toyota in Japan I was amazed by how hard they’re still working on flexible lines, experimenting with innovative techniques such as one-piece bumper molding, laser-screw welding tech, shorter assembly lines that are bolted on the ground rather than sunk into concrete so they can be moved, and so on.
  2. Built-in quality to make every product more robust, and every service more exact, which involves developing jidoka in every part of the delivery process.
  3. Total cost productivity by creating learning curves from customer complaints to value analysis projects (improving value in current production) and then value engineering in new developments (improving value in products being developed right now).

Achieving this, however, requires cooperation at all levels:

Just-in-time requires cooperation across all functions because the only way to control and reduce lead-time is to get all functions working together at takt time. For instance, if sales needs to hit its targets at month end and decides on a sudden discount for customers, this will create an influx of orders production won’t be able to deal with (unless they have massive inventories, and still they might be holding the wrong type of products). Sales must commit to sales at takt time, so that production can delivery at takt time – not an easy thing for any salesperson (sales come as customer choose to buy, salespeople typically keep “sure thing” customers at the back of the pile to be sure to “make their month”)

Which mean just-in-time also requires cooperation between manufacturing and purchasing – for instance, heavy pressure on cost or a discount for volume is going to look good on purchasing’s objectives, but not help production produce seamlessly at takt times. And so on.

Chain of Help not Command

Just to think about it, if you really want to copy Toyota and assemble eight different product models on the same line, one by one (no batching), you’re going to have to tell product design that the new product they’re working on must be assembled in exactly the same sequence as other existing products. More cooperation needed.

Similarly, achieving built-in quality requires cooperation to transform the chain-of-command into a chain-of-help. When a team member pulls the andon cord, and the problem can’t be fixed right away by the team leader, but a real problem is spotted, first, management must immediately come on the spot, and then must be able to bring the colleagues from other functions that will understand where the problem comes from and how to fix it.

Last but not least, reaching for a total cost advantage means being able to think new products in the continuity of existing ones in order to involve the entire supply chain in value engineering. A car customer’s request, for a better cup holder, for example, will have to 1/ try to be fixed on current models in production (can engineering even do that?) and then 2/ addressed with engineering and the module supplier. The trick is that all the issues fixed on the current cup holder production and assembly are a wealth of knowledge and ideas to come up with a better, cheaper (full cost, from materials to assembly time) cup holder in future models. More cooperation.

In other words, the lean competitive advantage you seek cannot be achieved by having functional VPs who see their jobs as narrowly specialized bosses tasked to better run their function by implementing better systems and obtaining greater compliance from their people.

In order to achieve the flexibility, quality, and productivity improvements we seek to convince customers to stay with us and bring their friends, we need a completely different breed of senior officers. People who:

  • Are skilled at teamwork, as an individual skill. They can work with others across functional barriers and interests and look for ways to cooperate to support the company’s overall mission beyond narrow functional objectives.
  • Know how to take initiative. They can spot opportunities and run with them, trying stuff to see what flies and what doesn’t and look for advantages in working with others towards a common goal.
  • Continue to learn and stay fresh and open in their own backyard. In particular, they keep looking for talent and passion in the lower ranks and accept to learn from junior employees who might not have the full perspective but will surely have a better grasp of evolving technologies and their possibilities.
  • Are respected by their staff because they are seen as both competent and trustworthy. They know how to pacify or avert conflict, how to support people in trouble or when they show initiative (that don’t always work out as intended), and how to show the clear direction everyone needs to do good work. They recognize effort, and they have a good BS detector.

As you can see, I’m drawing a very different portrait of a department manager or functional VP.

Change Your Expectations of Management

In lean, the problem we’re trying to solve is: how can I surround myself with smart people, with initiative and ingenuity, who know how to work together (beyond the obvious barriers) and who have the knack to bring people along, so that I can listen to their opinion without fear that they’re simply pushing their functional agenda, and I can construct responses to today’s challenge by getting them all to work together?

In that sense, we’re looking at a completely different way of staffing a management team. First, we start from the people: who have we got in the company that shows promise, both in judgment and ability to get things done? Then what can we do to develop them? To give them space to enjoy their strong points, but also challenges to confront and develop their weak ones? And how does that fit with the list of challenges we need to crack?

The obvious conclusion is that the role has to be adapted to the person, not the person hired to fill the position.

I’ve asked Jeff Liker, lean’s leading expert on Toyota, and this is how he sees Toyota’s staffing decisions for senior jobs: “There are no real rules. If they think there is a reason to do something they do it.  One can rise up to VP through a function or there may be some broader rotation if they think it will benefit the person to get a broader experience to become VP.  or they may simply have a need for someone in a general manager role and nobody within the function is qualified. Or, it could be that they wanted to move someone into your general manager position and there is no obvious place for you at that time, so they find someplace else where you can be valuable.” So yes, there are many lean tools to get your management team working better together, such as gemba walks with the management team (to see the reality of operations), obeyas (large rooms to share challenges and discuss how each person solves problems), A3 sharing (sharing one’s functional problems, reasoning, choice of solution and limits of the chosen solution), and of course, constantly clarifying challenges so that people come together on the problems we’re trying to solve, before debating which solution is best adapted to the company, not functional turf. But the deeper change is learning to build a truly people-centric organization where the choice of who you work with determines what the organization will look like, rather than cutting out boxes on paper and staffing them with who is available at the time. To change how your management team works, first you have to change your expectations of it.”

Original article can be found here.

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