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Michael Balle

Michael Ballé: The boardroom is hard to convince, because it needs learning both lean and finance

By Michael Balle, co-author of The Gold Mine and The Lean Manager - Last updated: Tuesday, June 21, 2011 - Save & Share - Leave a comment

At the latest lean conference in Paris one of the presenters was the producer of French TV’s most successful sitcom. We learned that what makes a sitcom work is the consistency of the characters. Since many authors work on sequential episodes, if there are many episodes between the one you’re currently writing and the last one showing, chances are character affecting events will have happened in the episodes still on paper in between you will not know. Not only this creates rework, but it also weakens the characters, and so, the attractiveness of the show. By applying lean concepts of chief engineer, flow and built-in-quality (quality control no longer an external loop to producers, but within the production flow), this producer turned a failing series into a runaway success.

The lesson for me was that if lean thinking can apply to sitcom production, surely it should work in any industry, no matter how unlikely. On the other hand, in various industries, the greatest difficulties I’ve encountered where applying lean in the boardroom. The question most asked at lean conferences has to be: how do I convince my senior management? I’ve witnessed a few disastrous scenes when the executive committee had to agree on key challenges. And it’s no secret that getting senior execs to go to the gemba can be something of a challenge.

Still, as lean lore has it, if the student hasn’t learned, the teacher hasn’t taught. What are the main stumbling blocks we encounter when talking to senior execs, and what can we, lean people, do about them?

Lean starts at the gemba, there’s no way around it. Yet, going to the gemba is complicated for senior managers and for a number of reasons. Firstly, they’re very busy and feel they have more important things to do than look at details – even if we double the productivity of one cell out of twenty in one plant out of ten, how is that going to solve my overall problems? The difficulty for lean experts is to establish clearly the link between the P&L level challenge and what happens at the cell, and why senior guys should show an interest.

One CEO is leading the lean effort in his company (in Orry’s terms, he’s not trying to apply lean, he’s trying to become lean) formulated it this way:

What is pretty unique in this guy’s case is that he has clearly established the link between this practice and his results (triple the profits, double the cash in three years). He understands that going to the gemba to see how people solve problems is like manually cranking the productivity machine of the company, and he realizes that the moment he stops doing this, it will all revert back to the way it was before. The challenge for lean experts is to make their executives realize this, which often involves having a greater understanding of P&L and balance sheet issues – not just lean.

Secondly, senior executives have usually succeeded in getting where they’re at by delegating. To their way of thinking, delegating lean to someone is not only natural, it’s beneficial. Convincing them that the delegation relationship in lean is of a different order is hard work. In the previous company, the CEO found that he used to delegate results, but keep final signature to check what his guys where doing. Now, he spends time understanding how they frame the problem, and delegates signature – if they’ve framed the problem right, they’re unlikely to be very wrong in their decision-making. This is serious delegation but it rests on clarifying the upstream part of the decision making  process, not controlling the end results. In itself, this is a significant change in day to day attitude, and not one lean experts are very good at explaining.

Finally, doing lean involves agreeing at the higher level on the key challenges to solve for the company. This sounds like common sense, but in fact is highly political. The sales guy wants to sell, the production guy wants to invest, the research guy wants to… who understands what these guys want, and so on. In the previous example, the CEO had to go to his sales director and ask him NOT to take orders (in practice, to keep a high price) to avoid overheating. This did not go down well. In most companies I’ve seen, every exec co level director tends to follow his or her own objectives regardless of others, and synthesis is somehow obtained by the CEO. To successfully lean the company, one of the early work to do is to get alignment at the higher level on which specific challenges to pursue together. Not an easy task, and as lean guys, it requires a far deeper understanding of the business that we usually have.

In short, I believe that our greatest difficulties are at boardroom level but that as with many things as lean experts we tend to fall short. Convincing senior executives require understanding both the P&L issues and the lean framework – which is something of a challenge.

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