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Michael Balle

Michael Ballé: Lean is never sustainable, but one person can become better and better at it

By Michael Balle, co-author of The Gold Mine and The Lean Manager - Last updated: Friday, April 15, 2011 - Save & Share - Leave a comment

Where do lean results come from ? increased Sales are supported by a firm understanding of PROTECT THE CUSTOMER within the company. Delivering products without defects on time has a remarkably rapid effect on sales. Sales are further developed by improving the engineering of the product or service in order to better satisfy customers, but the first step is to teach the organization to protect the final customer by protecting each internal customer.

Secondly, Cash improvements come from the inventory reduction resulting from stabilizing and leveling customer demand and pulling the process. Both techniques are about the second big step in the company: STABILIZING THE LEAD TIME, and then, later, through flexibilizing the resource REDUCING THE LEAD TIME. These two actions deliver tens of millions of euros in Cash as well as supporting the first process protecting on time delivery for customers.

Thirdly, where to EBIT improvements come from. The first cost improvement comes from direct labor productivity, which is inherent in stabilizing logistics through pull and creating balanced cells. This usually accounts for about 10% productivity increase per year, every year one continues to put tension on the pull system. Overall this delivers between 5% to 10% Sales per person increases per year over years. The second cost which is directly impacted by REDUCE COSTS BY ELIMINATING WASTE is capital expenditures, as machines become simpler, better utilized and more adapted to a lean flow. As the company learns to develop autonomy in problem solving, CORPORATE OVERHEADS can also be reduced quite drastically, thus leaning the company further. Finally, as the lean approach comes together across functions, engineering, manufacturing engineering, production and purchasing can pull their efforts to reduce the cost of the products, whilst continuing to improve their use to customers. At this stage, yes, some lean improvements will be lasting as they will be inbedded in the products and equipment themselves. Even so…

To come into being, these various improvements require numerous learning loops. The first and foremost person who needs to practice lean in the company is the CEO. The CEO’s opinion about products and strategy matters disproportionately in the company both in terms of what decisions are taken and role modeling. The CEO is the person will drive PROTECTING CUSTOMERS, MASTERING AND REDUCING LEAD-TIME and ELIMINATING WASTE, and craft their strategy accordingly.

It took us a long time to realize that Toyota taught TPS to suppliers by having a junior engineer conduct kaizen workshops at the gemba in order to have the sensei take the CEO there and learn from it. Kaizen workshops are important to develop local staff, but it will take a while until all operators are brought on board this way. On the other hand, if the CEO regularly visits kaizen efforts, experience shows that strategy and policy can change radically quickly, and thus deliver quick results. Conversely, when the CEO stops visiting kaizens, the drive for improvement stops right away.

Secondly, once the improvement strategy is clear, shop floor kaizen activities are essential to bring all people on board all the time. By picking kaizen topic that align with the global challenge, all employees can then understand how they contribute to the company’s strategy, and make suggestions – putting their brains to work for the company.

Thirdly, middle-management needs to learn to solve problems across its functional boundaries in order to develop teamwork. Choosing the topics is critical for the leaning of the company, not always immediate, and requires a lot of CEO input. Yet, this activity is essential to lean the company in depth, and bring all heads together to kaizen processes.

Ultimately, lean pursued with an experienced lean CEO, an established relationship with a sensei, and room to experiment, can deliver astonishing performance results in relatively short time. On the other hand, LEAN CANNOT BE SUSTAINABLE inasmuch as the moment the CEO moves on or focuses on something else (such as M&A, etc.), lean efforts stall, and results go return to average – I have seen this many times.

For lean to become sustainable, as we can see in Toyota, the next CEO must also be steeped into lean thinking and practice. This is possible, yet very unlikely, and I know of no other company than Toyota as yet where such relay of baton has succeeded. It would require a critical mass of lean thinkers in the company’s senior officers that is rarely seen. However, one person can become better and better at lean. I’ve seen CEOs move from one company to the next and handle the next lean cycle in their new company with greater maturity and a confident hand. CEOs in their fourth or fifth cycle usually get lean results without anyone in the company realizing they are leaning it. They have learn from experience not to communicate overmuch about lean, not to train to lean, but just develop their people’s autonomy and problem solving, and autonomy of forming their own vision of the progress of their department.

In truth, practicing lean doesn’t make you much better at “lean.” What it does do, is make you vastly better at your job. A tongue-in-cheek way of calculating performance would be:

Performance = f(#of PDCA cycles)

So lean sustainability has no value in itself – indeed, might not even make sense. Practicing lean thinking everyday from the CEO through the rank and file down to every value-adding operator is what delivers results. Conversely, a new management team that inherits a “leaned” company without daily practicing lean thinking will never have the knowledge or discipline to sustain a leaner working environment, and, without realizing what they’re doing, will break the dynamic and revert the company to where it was in as little as 6 months. Performance is in the practice.

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