Middle School or First Grade?
When Orrie Fiume, then Executive Vice President of Wiremold, asked Chihiro Nakao their Japanese sensei of 10 years, “How far along are we in lean?”, Nakao answered with a metaphor and a grin:”starting in middle school.” Wiremold is one of the American early lean success stories, documented extensively in Womack and Jones “Lean Thinking” pages 90-110.
If Wiremold, with all its success, was only in middle school after 10 years, where is your company after say three to five years? After twice reviewing in a five year time span several companies on the road to lean, here is what they need to do to get out of the first grade.
1. A Staff Program
Company leaders should understand and accept that lean is a revolution in organization/management thinking requiring many years of hard work by the entire organization. It is not a “program” to be implemented only by technical staff. Consequently, the associates need to be trained and included in the transformation so they know what the Sam Hill you are talking about. In the 1960’s, we saw ads for “Operations Research” technicians; in the 1970’s, for “MRP Experts”; in the 1980’s for JIT experience; in the 2008’s, Six sigma belts. Technical staff stay a couple of years, are promoted or get better jobs elsewhere and any improvements become short term and non-sustaining without the associate participation. When anyone in the company says “how do you sustain the gains”, that is the kiss of death. In a company truly on the lean journey, sustaining the gains doesn’t come up.
2. Return on Investment
The road to lean is not a financial venture. Financial metrics need to be focused on cash, the reduction of errors, reduction of all cycle times and work flow. The road to lean is not a focus on return on investment but a company transformation to a higher ground of cultural achievement. Selecting “projects” and doing blitzes based on ROI as the determining factors and only goals for the journey, is a kiss of death. Nothing inherently wrong with knowing ROI as short term bits of data, but looked at in the traditional, short term “payback” objective is applying the “batch and queue” thinking to the long term organizational strategy of lean. The success metrics lie elsewhere.
3. Acquired by Experts
Companies on the lean road are sold and the buying company crashes its own kindergarten ways down on the acquired company. Although recovery is possible and has been done, the acquired company may not recover any time soon. Corporate arrogance from what Doc Hall calls the “master/slave” mindset is the kiss of death. “We are from corporate and we are here to help you” doesn’t work.
4. Software
After spending millions on sophisticated software, a company with little lean understanding will implement the excruciatingly detailed transactions throughout the entire organization in search of “control.” Computer systems are vital to managing our business and personal affairs, but a lean company bent on simplification of work flow and the required transactions has to determine that information systems follow the process not the other way around. Simplify the process means simplifying the information systems. Complex information systems are designed around complex transactional processes. We have to step up to the fact that four or more decimal places has little to do with control; recording every movement of work flow, office or factory, is a strong suggestion that the process needs to be simplified not detailed further; continuation of the traditional transactional batch and queue thinking is the kiss of death to getting out of the first grade.
5. Stagnation
Some companies do great work in starting down the lean road. They run the first lap in record time, maybe, call people in to benchmark but later, through a lack of understanding of the length of the journey, or a change in management, don’t realize that it is a four lap introduction – just to get started. Such companies say how do we sustain the gains and are not sure where to go next. If such companies engaged the entire organization, continued with ongoing training, the opportunities to improve would stack up and sustaining the gains would not come up.
6. Long Term
Ten years from now I DON’T expect many CEOs will be saying, “we don’t care much if we maximize our lead times, continue with wasteful methods because that is our history, process our work in very large batches because that was always efficient, spend minimal time on continuous improvement because workers have to make parts, hold training costs down because training ROI is hard to measure, dump our factory waste into the river because it is cheap, and lobby for more lenient laws on air pollution.” If our prognosis is correct and we don’t expect to hear much of that from CEOs of the future, then when are we going to get started toward middle school?
Cash Powell, July 2008
Center for Competitive Change
University of Dayton
Tuesday, July 29, 2008
Friday, May 30, 2008
Following in Toyota's tire tracks
In his book, The Machine That Changed the World, James Womack writes about Toyota's manufacturing prowess. E m p l o y i n g 36,000 workers nationwide — 7,773 a few miles down Interstate 75 from Dayton — Toyota is revolutionary in its speed to market, product quality and ability to make profits. Its capitalization is equal to the sum of GM's, Daimler-Chrysler's and Ford's combined. Local companies such as Crown Equipment and Antioch Publishing grow by emulating Toyota's methods.
What is the secret behind Toyota's success?
Lightning struck when Atsushi Niimi, president of Toyota North America, revealed the essence of the Toyota production system to 1,000 manufacturers on Oct. 20. But U.S. manufacturers have copied the "what" of the system — i.e. its manufacturing methodology — without understanding the "why" that makes the system — i.e. the way to manage the company.
The "why" of Toyota's business model is so simple that it astounds. Toyota managers believe that respect for human dignity is what managers should focus on. Nothing is more important to value than the time of a human being.
Niimi says, "We can only spend it once!" Toyota has developed an entire management methodology, called lean, based on not wasting the time of their work force. Toyota eliminates what it calls the seven deadly time-wasters with a vengeance: waiting, making too much, storing inventory, unnecessary motion of the worker, rework (quality), and processing or moving parts when you don't need to.
Toyota's secret competitive weapon, however, is avoiding an eighth waste: emotional conflict between management and the work force.
Toyota's "we are all in the same boat" mentality is based on cooperation. All of the time spent on grievances is turned into making better products. That translates into profits. Those profits are then shared with the work force and invested in research and development to launch new products.
In a legendary demonstration of how this works, Toyota formed a joint venture with GM. They turned a UAW plant in Fremont, Calif., which had thousands of grievances annually, into a unique corporate culture.
The company is called NUMMI, and its core values have five cornerstones: teamwork, equity, involvement, mutual trust and respect, and safety.
How has it worked out? It has grown to become a company of 5,500 team members who produce three award-winning vehicles — the Toyota Corolla, Toyota Tacoma and Pontiac Vibe — at the brisk pace of 360,000 vehicles per year. In 2002, it began producing a right-hand drive Toyota Voltz, which is exported to Japan.
Is the essence of competitiveness and creating jobs in the United States as simple as valuing human dignity?
Crown Equipment and Antioch Publishing think so, and they are taking the lessons of teamwork one step further. They ask their teams not only to improve the current state, but to create a future desired outcome that their customers are willing to pay for.
With management and work force teams working together creatively toward a positive future, conversations about moving to China become mute.
What is the secret behind Toyota's success?
Lightning struck when Atsushi Niimi, president of Toyota North America, revealed the essence of the Toyota production system to 1,000 manufacturers on Oct. 20. But U.S. manufacturers have copied the "what" of the system — i.e. its manufacturing methodology — without understanding the "why" that makes the system — i.e. the way to manage the company.
The "why" of Toyota's business model is so simple that it astounds. Toyota managers believe that respect for human dignity is what managers should focus on. Nothing is more important to value than the time of a human being.
Niimi says, "We can only spend it once!" Toyota has developed an entire management methodology, called lean, based on not wasting the time of their work force. Toyota eliminates what it calls the seven deadly time-wasters with a vengeance: waiting, making too much, storing inventory, unnecessary motion of the worker, rework (quality), and processing or moving parts when you don't need to.
Toyota's secret competitive weapon, however, is avoiding an eighth waste: emotional conflict between management and the work force.
Toyota's "we are all in the same boat" mentality is based on cooperation. All of the time spent on grievances is turned into making better products. That translates into profits. Those profits are then shared with the work force and invested in research and development to launch new products.
In a legendary demonstration of how this works, Toyota formed a joint venture with GM. They turned a UAW plant in Fremont, Calif., which had thousands of grievances annually, into a unique corporate culture.
The company is called NUMMI, and its core values have five cornerstones: teamwork, equity, involvement, mutual trust and respect, and safety.
How has it worked out? It has grown to become a company of 5,500 team members who produce three award-winning vehicles — the Toyota Corolla, Toyota Tacoma and Pontiac Vibe — at the brisk pace of 360,000 vehicles per year. In 2002, it began producing a right-hand drive Toyota Voltz, which is exported to Japan.
Is the essence of competitiveness and creating jobs in the United States as simple as valuing human dignity?
Crown Equipment and Antioch Publishing think so, and they are taking the lessons of teamwork one step further. They ask their teams not only to improve the current state, but to create a future desired outcome that their customers are willing to pay for.
With management and work force teams working together creatively toward a positive future, conversations about moving to China become mute.
Wisdom needed at the top
What caused the demise of Enron? Kurt Eichenwald, in his book Conspiracy of Fools, describes Enron's problems as a commanagement - petence, fraud and lack of gray hair in top management. Enron had managers who lacked values, ethics and wisdom — few if any had the tested experience to do the jobs they were hired for.
If gray hair and wisdom are what we need in top management, why are so many companies eager to get rid of senior people — the very people who combine knowledge of the business with the wisdom to know the right thing to do?
The wisdom void at Enron ultimately led to violations of what we might call Management 101. Enron didn't do the basics: It didn't track its cash, it didn't write or keep track of its corporate guarantees in a single place, and it wildly, without due diligence, invested billions of dollars in farflung and unrelated businesses that ultimately didn't work.
Wasn't there anyone who could see the end coming? According to Eichenwald, there were. Reports with warnings emerged from an internal Enron review and from a report from outside auditor Arthur Andersen.
They were ignored. The senior Andersen executive was taken off the Enron account. With inexperience and narcissism at the helm, Enron developed a culture of greed that ultimately provided a breeding ground for fraud.
What we do in the everyday world of work, when no one is looking, is the real meaning of organizational culture.
Growing, molding and influencing young managers to adopt the proven values of successful and virtuous senior managers is critical to a long-term successful economy. And it is set, rewarded and put in place by top management.
If the corporate culture says, "If you speak out, you will be fired," nobody is going to speak out, regardless of what is written in the personnel manuals or published in the vision statements.
If gray hair and wisdom are what we need in top management, why are so many companies eager to get rid of senior people — the very people who combine knowledge of the business with the wisdom to know the right thing to do?
The wisdom void at Enron ultimately led to violations of what we might call Management 101. Enron didn't do the basics: It didn't track its cash, it didn't write or keep track of its corporate guarantees in a single place, and it wildly, without due diligence, invested billions of dollars in farflung and unrelated businesses that ultimately didn't work.
Wasn't there anyone who could see the end coming? According to Eichenwald, there were. Reports with warnings emerged from an internal Enron review and from a report from outside auditor Arthur Andersen.
They were ignored. The senior Andersen executive was taken off the Enron account. With inexperience and narcissism at the helm, Enron developed a culture of greed that ultimately provided a breeding ground for fraud.
What we do in the everyday world of work, when no one is looking, is the real meaning of organizational culture.
Growing, molding and influencing young managers to adopt the proven values of successful and virtuous senior managers is critical to a long-term successful economy. And it is set, rewarded and put in place by top management.
If the corporate culture says, "If you speak out, you will be fired," nobody is going to speak out, regardless of what is written in the personnel manuals or published in the vision statements.
Businesses could learn from Packard
In a celebration of automotive ingenuity tied to engineering integrity, came in the form of a tribute to The Packard Motor Car Company during a weekend gala in February. Packard's commitment to engineering integrity brought it unparalleled corporate success from 1899 to 1956. The Packard Museum attracts a national audience for this event, including Bostonian Charlie Wallace, who has four Packards.
In wandering through the museum with visitors such as Wallace, it is easy to get caught up in the Packard engineering prowess. According to Wallace, Packard's aircraft and marine engines helped win two world wars. For example, Packard made the engines for the PT 109, piloted by former President John F. Kennedy.
When the British needed help in producing thousands more of the Rolls Royce Merlin aircraft engines needed to fly the P51 Mustang, and the British Lancaster and Hurricane Bombers in World War II, Packard, a competitor of Rolls Royce, came to their rescue.
According to Robert Signom II, local attorney, avid Packard collector and founder of the Packard Museum, Rolls had initially approached Ford engineers. They said "the production quota can't be met, it can't be done." Packard engineers said, "We can do it, but it requires engineering changes."
Packard made 1,600 engineering changes, Signom said, with production lines rolling out the first engine in 90 days. Packard produced more than 55,000 of the "Packard" Merlin engines between 1941 and the end of the war; Rolls made only about 10,000.
Packard achieved a product development challenge that many of today's companies, with the help of computers, still couldn't meet. "We couldn't hold the approval meetings in 90 days," is a remark frequently heard when companies are introduced to lean product development, something that Packard was practicing in the 1940s.
But Packard forgot its vision of always building up to quality and never down to price, said Signom.
When the company lost its leader of more than 40 years, Alvan Macauley — a former Daytonian and patent attorney for John H. Patterson — Packard hired an accounting firm to tell it what to do. Without car guys in the lead, Packard followed a disastrous recommendation to parcel off the company. The bean-counters thought the company would be worth more if sold off or liquidated. What can we learn from the story of The Packard Motor Car Company?
Headlines rage about whether or not to stay in business and apply engineering integrity to develop products or to follow Wall Street recommendations and break companies into pieces to maximize the stock price.
A number of Wall Street analysts, for example, have pushed for a breakup of Hewlett Packard. In Business Week, they argued that "HP's pieces, from the dynamic printer division to the lagging computer businesses, would be worth far more apart."
Worth more on paper, that is. But we have to ask, "Do we form businesses to provide products for human need in the long haul, or do we form businesses to provide paper profits in the short term?"
Some executives are now asking that same question from jail. Human weakness can push the boundaries of ethics and law too far in the quest for short-term profits.
It's fun to walk the halls of America's Packard Museum with devotees like Wallace. It transports you to the romance of the Art Deco period. But it would be even more fun to visit a robust Packard Motor Car production line still turning out those exotic vehicles, illustrative of America's engineering ingenuity combined with integrity.
Let's hope American companies will remember the Packard story and remain true to what made America great — engineering integrity applied to make society and the world a better place.
In wandering through the museum with visitors such as Wallace, it is easy to get caught up in the Packard engineering prowess. According to Wallace, Packard's aircraft and marine engines helped win two world wars. For example, Packard made the engines for the PT 109, piloted by former President John F. Kennedy.
When the British needed help in producing thousands more of the Rolls Royce Merlin aircraft engines needed to fly the P51 Mustang, and the British Lancaster and Hurricane Bombers in World War II, Packard, a competitor of Rolls Royce, came to their rescue.
According to Robert Signom II, local attorney, avid Packard collector and founder of the Packard Museum, Rolls had initially approached Ford engineers. They said "the production quota can't be met, it can't be done." Packard engineers said, "We can do it, but it requires engineering changes."
Packard made 1,600 engineering changes, Signom said, with production lines rolling out the first engine in 90 days. Packard produced more than 55,000 of the "Packard" Merlin engines between 1941 and the end of the war; Rolls made only about 10,000.
Packard achieved a product development challenge that many of today's companies, with the help of computers, still couldn't meet. "We couldn't hold the approval meetings in 90 days," is a remark frequently heard when companies are introduced to lean product development, something that Packard was practicing in the 1940s.
But Packard forgot its vision of always building up to quality and never down to price, said Signom.
When the company lost its leader of more than 40 years, Alvan Macauley — a former Daytonian and patent attorney for John H. Patterson — Packard hired an accounting firm to tell it what to do. Without car guys in the lead, Packard followed a disastrous recommendation to parcel off the company. The bean-counters thought the company would be worth more if sold off or liquidated. What can we learn from the story of The Packard Motor Car Company?
Headlines rage about whether or not to stay in business and apply engineering integrity to develop products or to follow Wall Street recommendations and break companies into pieces to maximize the stock price.
A number of Wall Street analysts, for example, have pushed for a breakup of Hewlett Packard. In Business Week, they argued that "HP's pieces, from the dynamic printer division to the lagging computer businesses, would be worth far more apart."
Worth more on paper, that is. But we have to ask, "Do we form businesses to provide products for human need in the long haul, or do we form businesses to provide paper profits in the short term?"
Some executives are now asking that same question from jail. Human weakness can push the boundaries of ethics and law too far in the quest for short-term profits.
It's fun to walk the halls of America's Packard Museum with devotees like Wallace. It transports you to the romance of the Art Deco period. But it would be even more fun to visit a robust Packard Motor Car production line still turning out those exotic vehicles, illustrative of America's engineering ingenuity combined with integrity.
Let's hope American companies will remember the Packard story and remain true to what made America great — engineering integrity applied to make society and the world a better place.
Miami Valley Needs More Barbarians
Lawrence M. Miller's book, Barbarians to Bureaucrats: Corporate Life Cycle Strategies, points out that we used to be take-chance visionaries: thinkers, doers, inventors and change agents.
Now we have become civilized, homogenized, bureaucratized and follow-the-herd thinkers.
Dayton spearheaded a new segment of the economy with two barbarians named Wright who had the wild and crazy idea that they could fly. The Wrights were true innovators because they not only overcame the `It can't be done,' standard killer phrase, they also had to overcome faulty data developed by the respected German engineer Lilienthal. How many millions of jobs were created because of the contributions of two inventors from Dayton; barbarians, according to Miller?
What does our homogenized, bureaucratic thinking produce? Current headlines tell us: 600 jobs lost in Mead Westvaco consolidation, Hewitt Soap to close after 128 years, 160 jobs from Deuer Manufacturing in Dayton to move to Mexico.
Instead of the inventor engineer being the driver or the force behind the company, Charles F. Kettering being one example, we have bureaucrats in distant holding companies focusing on number crunching: Buying and selling companies for profit, making the quarter or the month, and moving plants in search of low wages.
The problem is we are no longer focused on making money through innovation and developing engineering-based products. We chase low labor rates, moving plants first to Mexico and then to China.
We need our corporations to be healthy. Making money is a good thing. To do this long term, however, we need wisdom-driven, value-based barbarians to get to the top.
We want our leaders to out-think the competition and to create corporate wealth through good research and development, engineering innovations, and continuous improvement - the removal of wasteful activities.
The current follow-the-herd bureaucratic thinking, that focuses on making money, buying and selling each other, or chasing low labor rates, leads to chaos and job displacement - and does not create a wealth-producing economy.
Now we have become civilized, homogenized, bureaucratized and follow-the-herd thinkers.
Dayton spearheaded a new segment of the economy with two barbarians named Wright who had the wild and crazy idea that they could fly. The Wrights were true innovators because they not only overcame the `It can't be done,' standard killer phrase, they also had to overcome faulty data developed by the respected German engineer Lilienthal. How many millions of jobs were created because of the contributions of two inventors from Dayton; barbarians, according to Miller?
What does our homogenized, bureaucratic thinking produce? Current headlines tell us: 600 jobs lost in Mead Westvaco consolidation, Hewitt Soap to close after 128 years, 160 jobs from Deuer Manufacturing in Dayton to move to Mexico.
Instead of the inventor engineer being the driver or the force behind the company, Charles F. Kettering being one example, we have bureaucrats in distant holding companies focusing on number crunching: Buying and selling companies for profit, making the quarter or the month, and moving plants in search of low wages.
The problem is we are no longer focused on making money through innovation and developing engineering-based products. We chase low labor rates, moving plants first to Mexico and then to China.
We need our corporations to be healthy. Making money is a good thing. To do this long term, however, we need wisdom-driven, value-based barbarians to get to the top.
We want our leaders to out-think the competition and to create corporate wealth through good research and development, engineering innovations, and continuous improvement - the removal of wasteful activities.
The current follow-the-herd bureaucratic thinking, that focuses on making money, buying and selling each other, or chasing low labor rates, leads to chaos and job displacement - and does not create a wealth-producing economy.
The joy of work is key to success; Management should create fun environment
If companies are to succeed, they have to get their people to love their jobs, says Douglas Mc-Gregor in his book The Human Side of Enterprise. McGregor's treatise inspired Shigeo Shingo, the famous Japanese contributor to lean manufacturing, to help develop the Toyota success story by developing a work culture based on unleashing the human spirit — creating work spirit.
Shingo further believed that top management must establish a culture where work is fun, where people look forword to coming to work in order to express their creativity.
With headlines such as "Delphi puts Vandalia on notice," one wonders if we haven't lost the vision that there can be joy in work, or if we can establish cultures based on work spirit in American companies.
There are plenty of examples of work spirit as key contributors to the bottom line. Jack Warne, former chief operating officer of Omark, said work spirit contributed 10 percent to the company's bottom line, year after year.
"I know of no example where work spirit can survive if the culture is not established and maintained by top management," he said.
Omark created one of the most successful U.S. stories in transforming a traditional manufacturing culture to the highly successful lean manufacturing strategy. Warne's communication style at work is guided by how he speaks with his wife — an art of caring through language and melodious tone of voice.
Could creating work spirit be this simple? William E. Le May, founder of five manufacturing companies and currently chairman of Waytek, a producer of paper, film and foil adhesive coatings in Franklin, agrees that language is important in creating work spirit, and that it is top management's job to establish the culture needed to facilitate joy in work.
Le May uses three principles:
• Understand and have a real awareness of the needs of the employees, providing such things as advancement in time off or even transportation to work.
• Really listen to employees — managers should not spend all of their time in the office politicking with the next level up; they should be in contact with the employees on the floor.
• Develop pride in the employees with regard to the company's product and the importance of it.
Here's where direct communication comes in play. Le May believes in lots of praise. Praise is needed to overcome the natural barrier between management and the work force.
"Watch what happens when you give praise," Le May says. It creates a smile on the face of the one receiving the praise.
Fred Smith, former chairman of Huffy Corp, offers an additional suggestion about creating work spirit through communication: never send a letter (or e-mail) if you can call; never call if you can see someone in person.
'Tis the season for recommiting to the art of kindness in communication as the foundation of enhancing spirit in our personal lives and in creating work spirit. And don't forget the melodious tones.
Dayton APICS names CSC 'company of year'
The Dayton Chapter of APICS, for Operations Management, has named Computer Sciences Corp. as "company of the year," the chapter announced.
This award is presented to "the Miami Valley company that has shown outstanding leadership in continuous education and training for employees".
CSC has completed APICS training in logistics in preparation for certification examination.
CSC is the second of the largest consulting firms from North America as ranked by Consultants News, APICS said. The Falls Church, Va-based company employs 90,000 people in 80 countries. The company has some 400 employees in Fairborn and the Dayton area.
This award is presented to "the Miami Valley company that has shown outstanding leadership in continuous education and training for employees".
CSC has completed APICS training in logistics in preparation for certification examination.
CSC is the second of the largest consulting firms from North America as ranked by Consultants News, APICS said. The Falls Church, Va-based company employs 90,000 people in 80 countries. The company has some 400 employees in Fairborn and the Dayton area.
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