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Michael Balle

Michael Ballé: Lean is a CEO practice to improve performance

By Michael Balle, co-author of The Gold Mine and The Lean Manager - Last updated: Wednesday, November 23, 2011 - Save & Share - Leave a comment

The first thing his sensei told my father when they started working together was that the great weakness of TPS was that it rested entirely on the plant managers. Years later, this statement turns out to be confirmed, time and time again.

If there’s one thing we’ve learned is that lean is a practice – and well, a practice. I’ve been discussing this issue with other CEOs and one different way at looking at lean is that it is a personal practice for the CEO to have a direct influence on his or her company’s performance. This practice is based on, first, going to the gemba regularly to understand problems in depth by catching the facts are their source, and second developing people by getting them to do kaizen: solving problems or improving

The overall guidelines for choosing problems are:

1) safeguard employees by improving ergonomics

2) protect customers by improving quality (stop at defect) and shipping on time

3) controlling lead-time by levelling and pulling

4) reducing lead-time by increasing flexibility – which has mostly do do with SMED

5) reducing costs by involving operators in kaizen and following standardized work

So far, I’ve not found any situation from healthcare to machine shops where these generic steps don’t clean the window and highlight vast opportunities for performance improvement, which will show up in the financials.

If exercised regularly, the two core practices of going to the gemba and developing people through kaizen have three profound effects: first, the strategic picture becomes clearer from a deep familiarity with the facts on the ground, and the CEO can align his or her organization on a clear direction. Secondly, the CEO gets various parts of the organization working together on an ad hoc, case by case basis, which overall improves process effectiveness radically (imagine the impact on, say, inventory just getting logistics and purchasing to agree on more frequent deliveries from suppliers). Thirdly, as all employees solve problems they develop their own expertise and the company gains capabilities it didn’t have before: it starts learning to do things its competitors can’t copy easily, without investment.

Conversely, if the CEO stops practicing this, chances are the company will revert to whatever is its base case performance situation. In this sense, the CEO has a direct hands-on action on performance, much as a potter at the wheel, or manning the bellows in a forge.

If this view is correct, lean simply can’t survive a change in top management unless the new CEO is also an adept at lean practice, and we need to learn to live with that. Experience shows that, very rarely, if the outgoing CEO has practiced lean long enough, some of his direct reports have picked up the practice as well and they can continue in their area for a while. But if the new CEO doesn’t get it, it’s uphill work because decisions will be taken at crossed purposes every time.

It’s an excellent question and a tough one – I wish I had a better answer, and I wish I could promise that lean hardware and systems in place, particularly such as the pull system or andon, can carry lean processes over even in the case of management changes, and sometimes it does. But ultimately I suspect that lean is a way of managing by linking the top and the gemba and aligning everybody on delivering to customers. This is up close and personal, and if the CEO doesn’t promote it, everywhere, everyday, I doubt any one else can.

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