Looking Lean vs. Being Lean: A Critical Debate on Leadership

Evolving Excellence has become a bit punchy lately, but this is because we feel that a critical debate is needed within the lean manufacturing community. 

Paradigms, methods, and outcomes need to be challenged, as how we move forward may determine the future of manufacturing competitiveness in North America.  We are sometimes being very blunt in asking some tough questions of individuals and organizations that we have tremendous respect for, but we believe we need to take a step outside of the box and look inward to ensure that our vision of lean is really "being lean" and not just "looking lean."

The debate began in May when we published a post questioning an article in Target by Jeff Owens of Delphi, where he describes how his company's culture helps create excellence.  By then Delphi had won many Shingo Awards for manufacturing excellence, but the company was already experiencing severe financial problems.  In July my co-author Bill Waddell published a post on Steve Miller joining Delphi to ostensibly turn it around, however we noted that he did not have the background to actually attack the manufacturing side of the operations.

In October things started to heat up, with Delphi filing for bankruptcy on the 8th of the month.  Jim Womack of the Lean Enterprise Institute sent out his regular missive, where he talked about Delphi's lean activities and how they weren't enough to offset "legacy" costs associated with union contracts and healthcare benefits.  That got us to thinking... is Delphi truly lean?  In a follow-on post we questioned that assertion... even though they had won many Shingo Prizes.

But what really got to us were the statements that lean was in place but couldn't succeed due to the legacy costs.  We've always believed that true lean requires lean management thinking, and therefore excellence in management.  Leadership, planning, hoshin kanri... all are core to the Toyota culture.  As we described in a later post, Delphi paid a shareholder dividend only months before declaring bankruptcy and they decided not to use their substantial cash reserve to buy out legacy agreements or shutter plants.  They knew they had these commitments coming due, but they did not confront them and instead opted for bankruptcy... and an apparent attempt to join the hoardes of mis-managed companies chasing low labor rates instead of internal waste reduction.  That is not excellence in management, and definitely not leadership.

This led us to ponder the difference between "looking lean" and truly "being lean."  Bill wrote a thought-provoking post on the issue, where he discussed the importance of looking outside of the actual assembly process.  In early November the requirement of "lean management" to ensure lean success was discussed in this post, again with Delphi as a specific example, with a discussion of one culprit being the difference between Sloan/DuPont ROI-driven management and Toyota/Henry Ford cash-driven management here.

The debate grew louder at the AME Annual Conference in Boston last week, where Jim Womack was a keynote presenter.  His presentation (view his presentation here, courtesy of LEI) was enthusiastically received, but also very sobering... which sparked a lot of debate with dozens of posts on forums such as NWLean.  Jim's remarks were interpreted with surprisingly large disparity... from a warning to manufacturers to a potential positive solution to pure gloom and doom.

Today Bill published a post reviewing a recent article in Manufacturing & Technology News, which discussed the apparent conflict between Delphi's Shingo Prize awards and their business performance that led to bankruptcy.  Shingo's executive director, Ross Robson, falls back to using legacy costs as the excuse, thereby completely forgiving management.  The plants that won Shingo Prizes had some great lean activities (although even Mr. Robson indicates one was unprofitable... how does that compute?), but lean is about leadership, culture, people... and profit.  Eli Goldratt said The Goal of manufacturing is to make money.  It's hard to be excellent if you aren't... even if you have supreme command and deployment of the tools.

The debate is not just ours... there have been similar hard-hitting posts in the Gemba Panta Rei blog and Mark Graban's Lean Manufacturing Blog, sith several follow-on comments.

Looking Lean versus Being Lean.  How do we ensure that our lean programs are really focused on true lean?  How do we avoid having manufacturers simply implement tools or simple training programs... aka "lean lite"?  How do we align awards and recognition such as the Shingo Prize, and certification programs such as the excellent SME/AME/Shingo collaboration so that they reflect true excellence... and not an oasis of lean tools in the middle of a desert of inept management?   Leadership is driving a vision throughout an organization, planning for success, accepting responsibility for failure, and making the tough decisions. 

How do we create real Lean Leadership? 

Start the debate and stay tuned.  The next issue of the Superfactory e-Newsletter will explore this further.

Comments

[G Oldon]

completely agree. leadership requires strength to make the hard decisions. it is sad to see names like gm and delphi fall due to leadership. they did it to themselves. they agreed to union demands. they pissed off their suppliers. they tried to sell volume with no margin.

[Elliott]

Great post. The Shingo Prize is so much more than Baldrige ever was so I don't want to see it take a hit with this but it needs to practice the continuous improvement philosophy it preaches. Two other comments:

1) I think of lean as a subset of excellence. I haven't decided if lean is a requirement for excellence, but I also think there are other factors besides lean that are required for excellence. Leadership excellence requires mastery of more than just lean. In fact it may be dangerous to think of excellence only in terms of lean. So perhaps this creates an even higher hurdle for Shingo and the AME-Shingo certification?

2) Consultants. Need I say more? I am so friggin tired of their programs. The only good consultants are the ones that work alone and actually become part of a company, continuously, for long periods of time. Otherwise there's no credibility and accountability to results. I haven't seen a lean program yet that couldn't be driven by the right highly-motivated internal employee.

All the worst books are written by people with theory and no shop floor experience. Those are the ones that are dangerous. All the best books are written by people who have lived on the shop floor. My favorite is Better Thinking/Better Results by Emiliani. True application and results and an overall company that succeeded. Not nebulous theory that sounds cool but ends up being buzzwords.

Lets fix this.

[Edward Klein]

I'm involved in a three-year consulting agreement with a company to do a lean turnaround. I bet if I got all of the lean tools implemented but the company was still losing money, that the shareholders wouldn't exactly be happy with me! It all comes down to cash in the bank for the owners.

[Billy O'Neil]

I'm using the Shingo Prize guidelines as the framework for a lean transformation at my company. This makes me think, and I will probably revise to include a more robust financial metric.

[Shannon Edwards]

Some of the criticism of leadership may be unfair as the union agreements were signed long ago. The legacy costs are real, and perhaps there are better more proactive ways to deal with them, but it is still a big mountain. Cash is the final answer and your previous post on the Ghost of Sloan was right on the money. We need to rethink how what we call success.
SE

[Anonymous]

Delphi is such a test case that we can't avoid it. The Collins & Aikman case is even more telling. Lean is only one factor in global competition, and rapidly becoming a necessity for survival, not a competitive advantage. I didn't count them, but the majority of Delphi's Shingo winners are in Mexico.

Probably the biggest monument is the expectation that manufacturing will replay its economic role of the mid-20th century, soaking up unemployment from rural areas. Right now we're soaking up male unemployment in construction -- it's obvious in China; less obvious here. And the pols in almost every state are pumping money into bio, hoping that somewhere in that pile is a new General Motors. Unlikely. Some explosive changes are overdue.

The Japanese are about ten years ahead of us thinking their way through this. They stopped revering Toyota about 10 years ago. With a few exceptions, Toyota being one, their large companies are as sick as ours.

[Anonymous]

I know we need zealotry in the world, but I also detest it. It is kind of like the reformed smoker ideal.

The problem I have with what is going on in some sectors of manufacturing, and I mean total manufacturing companies, not just the shop floor, is that there is a maniacal, even dangerous belief that all lean all the time, and lean excellence are the only thing needed to guarantee prosperity and success.

Without disparaging lean, I feel this is so dangerous. Running a company is about so much more than lean processes. It is very possible for a company to be highly lean and fail, go bankrupt, lose share, etc.

The zealots like Womack don't get it, will never get it. They talk about learning to see, but in many ways they are peripherally blind.

Now once again, I believe the lean philosophies must be adopted and must be succeeded at today, but this is not the sole answer, and a company cannot focus on lean to the exclusion of everything else. Things like leadership, strategy, price management, business development, innovation, creativity, etc etc, are also very critical to excel at.

[Michael Bremer]

Too bad anonymous....was anonymous. I agree with his/her thought that lean, by itself will not do it. Unfortunately, there is no one single answer that will, "Do it!" Fortunately, that is what keeps life exciting and fun.

The whole idea of flow and leaning out processes nest very well with Deming's "profound knowledge" or at least an opportunity to learn. Stephen Spear used a line at the AME Boston meeting that I thought was fabulous, and I plan to borrow.

"A problem in a process, is the voice of the process saying, 'Look at me! You don't understand me.' an issue needs to be addressed." Don't hide me. What a great way to think about process issues!

Lean, as it is being practiced in so many companies, falls somewhat short in the metrics department and in the language of executives. Executives speak in the language of numbers. We can accept it or fight it....but that is how it is.

So many lean zealots whine about my management does not support me. What are they (zealots) doing to proactively talk lean....in "executive speak?"

What are the issues (and I think this was one of the issues at Delphi) that cause disconnects with executive leadership?

1. Savings get over stated. Hard savings and soft savings get comingled. There is too much focus on cost reduction and not enough on "revenue growth" or as Womack is now saying creating more customer value....to increase revenues.

2. It is much safer and much easier to work on improvement projects rather than "strategic improvement." What are the top three strategic issues in your business? How are lean or six sigma tools being used to address those problems. They should get resources first.

3. Metrics in most businesses are worthless for addressing key issues in a timely way. I will only make one point here. How many companies have had major changes in their competitive environment? Most I would guess. From a metrics perspective then....how many companies are using the same metrics today they were using ten years ago? My guess...most. How could they (metrics) possibly be relevant?

4. And then we come to leadership governance....guiding the improvement activiites. If an organization is not doing a great job on numbers 1,2, and 3. The executive group is not going to have much interest in "governing" improvement activities....because they are largely irrelevant to the issues leadership is addressing.

The challenge is to us, in the improvement world. We need to make our programs relevant, meaningful and real. If our leadership team does not actively support our improvement efforts....the blame largely rest with us.

Michael Bremer
Author Six Sigma Black Belt Handbook & Six Sigma Financial Tracking & Reporting (aka: I had a million dollars in savings, but my P&L did not change)

[Bill Reiman]

With all due respect to those that make their living consulting or talking about lean... Taiichi Ohno might observe that if all of the time and talent that is wasted making charts, applying for awards, attending meetings and conferences, etc. were spent standing in a circle on the shop floor, designing equipment that requires no set up, making supply chains flow seamlessly, implementing team based incentives how much we might accomplish?

Is there any possibility that the essence of lean leadership lies in the doing, not the dialogue? How much of what we call improvement is real and how much is corporate political fluff, self serving or bureaucracy feeding hyperbole?

Perhaps our adulation of "award winners" is misguided. Perhaps the businesses that have a cultural bias to seek "true north" every day are too busy doing this thing called lean to talk about it or ask for anyone's approval.

[Rich Pollex]

Lean, JIT, Six Sigma - none of these operational mechanisms matter in the long run if the leadership type has no viable long-term strategy and business model that is truly unique. Then execution of the strategy is important. This 2nd stage is where the company decides on the mechanisms to actual win - not just pacify or limp along.
GM spun Delphi off to generate cash and then move their sourcing to lower cost suppliers. 2 things they forgot: the first was to actually shift purchases and second to spin Delphi off in a way to give them a chance at being viable and independent business that had a chance at succeeding.