Waste Is As Waste Does

by BILL WADDELL

I'm sure the people in manufacturing companies are sick and tired of hearing about General Motors, and often struggle to find the relevance of the travails of that bloated, inept behemoth to their business.  I really don't care much about them any more either, but studying them does have enormous value for a couple of reasons.  Since Toyota is the epitome of lean and a direct competitor, GM is the perfect example of a company that needed to become lean in order to survive, and failed to do so.  What constitutes being lean, and being lean enough, is very clear  when it comes to GM because Toyota is such a perfect parallel.  Also, GM actually originated the management processes that constitute the polar opposite of lean, so the contrast in old-school management and lean management is pretty clear, as well.  Finally, the bankruptcy proceeding is causing a lot of inside data to get spilled out all over the public domain, so we get a better look at GM than we do your company, for instance.

A statistic published yesterday is quite telling. " GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000," according to the Associated Press.  At the same time it has been widely claimed that GM's labor costs are roughly in line with the rest of the industry.  So if the direct labor people per car is about the same between all of the automakers, but GM has twice as many people per car as very un-lean Chrysler, where does that put them vis a vis the car companies that are actually doing well, and more important, what on earth can all of those people be doing to add any value?

It is at least partially a rhetorical question.  This chart was published on CNN this morning showing GM's very stead loss of market share. A former GM honcho told me a few weeks ago that GM had 2 Vice Presidents of Human Resources at the end of the 1970's - the top of this chart and at about the same time Toyota started slapping them around.  Recently - at about the bottom of this chart - as part of becoming the new 'lean and mean' GM, they cut back on staff and reduced the number of VP's of HR from 7 to 6.  So as their business was eroding, and they told the world they were becoming as lean as Toyota, they increased the number of human resources executives by 350%.    Market share down - people in offices up?  How can that possibly make sense even to them.  Yet they still think they are as lean as Toyota because they still see lean as a factory issue.

So what does this have to do with you and your lean journey?  You probably don't have 6 or 7 VPs of HR - maybe not even one, and you do not have ivory towers that gleam nearly as bright as those that induce such blindness at GM, but my guess is that your headquarters and front office at least have a few coats of white paint that make them special and at least a bit disconnected from the factory floor where value is created.

In a company I have worked with closely, I met a woman who is a very typical manufacturing success story.  She is smart, hard working, and has a  wonderful personality.  She put all of those attributes to work and moved steadily up the ladder from an entry level position on the shop floor to a nice office and a position of responsibility in accounting.  Now, even though she understands lean accounting quite well, she resists every project and element of her job that requires her to spend big chunks of her time in the factory.  The culture of the company is such that she feels she did not work so hard for so many years to get out of the factory only to end up back in it.

Status accrues from being in the office - not on the shop floor.  This is not an unusual situation.  Many, many companies have the same cultural weakness.  GM just does it in spades.  The greatest waste is rarely on the factory floor.  It is in a glut of executives and the entourage they require; and it is in every office worker who is disconnected from the factory.  The shop floor is the only place value is created, and the less office folks have to do with it, the more likely their job is to contribute very little to it.  And waste is any job or any activity that is not contributing directly to the value being created in the factory.

Every time you walk through a maze of cubicles and offices to get to the factory floor to lead a kaizen event, you are probably missing the greatest lean opportunities your company has.

Comments

[Brian Buck]

Outstanding point about the office being a great place to get Lean. Offices seem to thrive with "being busy for busy sake" and are ripe with improvment opportunities. Your blog is fantastic!

[matt mcknight]

Great post. The top heavy organization is a serious challenge. Japanese firms seem to deal with seniority in a different way, where titles don't reflect the operational structure. I just read something from Tim Harford that recommends moving people down in the organization, since it is no longer a brilliant idea to retire at 65.

[Peter P. Patterson, MD MBA]

What you write about GM is sad … but true.

Years ago, one of my mentors said, “Our troubles began when we separated the managers – who have responsibility – from the workers – who’ve had responsibility taken from them.” This is at the root of the “check your brains at the door” perception of most line workers.

It is reinforced whenever well-meaning managers tell their people what to do – that is they provide all the answers. In that set up, no new thinking or innovation is required from the worker – only robot-like implementation of the manager’s directives. This is insidious and evil to the core – and yet it is so much a part of our western organizational culture we are mostly completely asleep to it. Taichi Ohno never gave answers to his people – only challenges.

It is perhaps a cruel joke that GM even squandered away the gift when the
Toyota partnership with GM at NUMMI demonstrated, in only one year, a complete turnaround of GM’s worst-performing plant. The GM workers and managers at NUMMI were converted but that alteration never got close to the GM executive suite – a tribute I suppose to kind of management insularity you are exposing.
/Dr. Pete