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Art Smalley

Art Smalley: Lean Success Stories – The Good, The Bad, & The Ugly

By Art Smalley, - Last updated: Monday, July 12, 2010 - Save & Share - Leave a comment

I appreciate the reality that people need to see success stories about Lean or any topic for that matter in order to further their interest with the topic and move onto action. We are all somewhat risk averse by nature I suspect due to the way we evolved. For example you go over there and eat the purple berry on the bush and if you survive then perhaps I’ll give it a try! Implementing Lean or any improvement methodology has a bit of that conservative bias to overcome.

If you are interested in some Lean success stores then I recommend reading the book Lean Thinking by Dan Jones and Jim Womack available from multiple sources for several interesting cases to read about. A new LEI book entitled On the Mend is out now about the success of Lean Thinking in hospital and health care applications as well. ThedaCare in northeaster Wisconsin saved $27 million in costs without any layoffs and made impressive operational improvements as well.  It will always be difficult to find books or stories about someone exactly just like you as we all tend to exaggerate our differences and respective situations.

Of course I still think the greatest Lean success story of the past 60 years is that of Toyota Motor Corporation. There is lot to be learned from this company with regards to product development, people development, and of course its vaunted production system.  Sometimes I think we forget just how small Toyota once was and how difficult the obstacles were in its path to success. Of course they had some help and favorable breaks along the way but nothing supplants the discipline, hard work, and spirit of challenge that went into their improvement journey.

We tend to also ignore that fact that most of Toyota’s Tier One suppliers are quite successful as well compared to the competition. Denso, Aishin, and a handful of other companies are among the largest and most profitable in their respective industry. I have visited some Denso plants for example that I thought were more advanced than Toyota in several ways. Unfortunately a lot of the better TPS example plants are still in Japan which tends to make them invisible to foreign parties and tougher to appreciate. My friend Jon Miller and the folks at Gemba Panta Rei do a very nice job of arranging trips to Japan with access to over 80 different companies. For some people there is no substitute for direct observation and seeing indeed is believing.

When it comes to success however I think it depends upon what you are looking for. Success can be measures in financial terms, operational terms, or more intangible ways. Toyota has made billions of dollars in profits annually (except last year of course) in an industry that is not exactly viewed with much growth potential in advanced countries. There are quite a few companies with partial Lean transformations in place and substantial operational benefits to mention. The Lean Thinking book referenced above lists a couple.

On a personal level I helped a company with close to $1 billion in sales and several thousand people go from thousands of parts per million defects, to less that 50 ppm in a four year period. Some plants were under 10 ppm in terms of defect levels. Productivity improved between 10-12% annually for several consecutive years as well and delivery performance improved substantially as well. The CFO of the company estimated the savings for all the improvements in the neighborhood of $50 million. Equally importantly to me at least people felt better about their jobs and had a positive attitude about coming to work each day.

The Good, Bad, and Ugly of this topic though is that I think we all admit we don’t have a very good sales pitch down for Lean that will resonate with all parties especially executives outside of operations in senior management.  Just citing Toyota is not enough of a convincing story for various segments of the population. Any for every company attempting Lean and doing well I can point to a handful that have not done well in terms of progress. Even my personal example above was eventually bought out after I left and improvements efforts slowly ground to a halt. Executives often have little to gain from change late in their careers and much to lose. Let others go and eat the purple berry and we’ll see how they do. In the mean time I am retiring in a few years and don’t want to risk anything.

Reflecting upon the matter an untapped area in the Lean movement is the art and science of getting people to do things when they don’t yet see a compelling need to change. The generic advice offered is to “create a crisis” or “sense of urgency” to get people to want to change. I fear that method however does not always work and often is too late when applied. Toyota moved out of crisis mode in the early 1950’s and survived. Not everyone does however. Is there a proven way to get people to change behavior and improve performance without a crisis? I think that excellent leadership can do this in many cases. I am also aware however that this conflicts in some ways with basic human nature and the desire to avoid change (e.g. possible improvement OR possible worsening) until necessary. This in reality is the practical reason why we request to see success before we attempt something new on our own? We have our work cut out for us in this area to reach a broader audience.

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