President's Column
Getting Started:
What is a Lean Management System?
Just as your product value streams require brilliant processes to deliver value, your leadership team also requires a brilliant management process to lead effectively. Here are some questions to ask yourself about your management processes:
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Quick, where does your team stand with your three most important business objectives?
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Does every individual on your team know what’s required of them today, this week, this month, this quarter and this year to achieve these objectives?
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Do you have a process that links and tracks individual activities to your objectives to ensure your team will succeed?
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Does your team know on a continuous basis if they are ahead, behind or on schedule?
A prerequisite for effectively leading an organization of any significant size is a well defined and executed management system. Yet conventional planning systems are plagued by disconnects that create the most serious waste of all - that of knowledge, experience, and creativity. Indeed, conventional planning has been called every manager's "unfavorite" activity.
A Lean Management System seeks to create flow of information, ideas and strategies so that the company can align itself with the needs of its customers and stakeholders. It enables you, the lean executive, as part of your daily routine to:
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Identify and address critical business needs
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Align company resources at all levels effectively and efficiently
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Apply the Plan-Do-Check-Act (PDCA) cycle to systematically and quickly identify and eliminate the root cause of problems the first time
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Strengthen the capability of people and processes
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Consistently achieve critical results.
Key point: If your senior management does not understand the linkage between their business level goals and their team’s daily activities, they will quickly lose interest in your Lean transformation. It won’t be relevant to them.
Where can you find professionals who not only are expert with the concepts of lean management systems, but have considerable experience with their implementation?
There are precious few resources in North America with these skills (I know because I've actively searched for them), and I'm proud to say that two of them are LEAN Affiliates.
To discuss how a lean management system can be a competitive advantage for your company, feel free to contact me personally. I promise to listen.
-- Mark Edmondson
(For more information about Policy Deployment and Lean Management Systems click here).
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We hope you enjoy this issue of "The LEAN Executive".
Since it's the beginning of the fiscal year for many of us, in this issue we examine the fine art of goal setting, plus overview current thinking about "Lean Management" and how it differs from conventional management practices.
As always, your comments and suggestions are welcome - please follow the links at the bottom to send a note to the editor, or to forward this eNewsletter to colleagues.
Yours in success,
The LEAN Affiliates Team
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Management by Objectives
Flossing and Goal Setting
by Joe Kraus
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I went to the dentist recently.
I'm always slightly embarrassed at the dentist. It's as if I'm 11 years old all over again where I know I did something wrong and I'm just waiting to be caught.
I sat in the chair and after a few minutes of chit-chat, the hygienist began her ritualistic Socratic questioning.
"How often do you floss Joe?"
Of course, I don't floss. That's the problem. She knows I don't floss but she asks anyway. And, my trick of flossing the day before I come into the dentist's office never seems to fool anyone.
"Uh, not very often."
"That's ok" she said. "Just floss the teeth you want to keep."
Well if you put it that way...
Don't ask me why, but that line, "just floss the teeth you want to keep", got me thinking about goal-setting inside companies...
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Going Japanese
Should Your COO
Learn Japanese?
by Bill Waddell
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The terms “Lean Manufacturing” and “Japanese” are hardly synonymous. This may come as a shock to a number of manufacturers, and even more consultants, who seem to think that a prerequisite to becoming lean is rote memorization of the Japanese language. In fact, the originators of the Toyota Production System were very forthcoming that they learned it all from Henry Ford.
Most Americans think that Ford’s great contribution to manufacturing was the assembly line, but there is no mention of assembly lines in Shigeo Shingo or Taiichi Ohno’s writings about the Toyota manufacturing powerhouse. Rather, the principles learned from Ford that made an impression with Ohno and Shingo are based on the relentless pursuit of continuous flow, absolute quality, and effective synchronization. The economic objective Ford, and later Toyota focused on was continually improving real cash flow, rather than the theoretical objective of Return On Investment.
But while Americans are memorizing the seven types of ‘muda’ (waste) and proclaiming their lean experts to be ‘sensei’, these principles learned from Ford were lost on the American manufacturing community. It turns out they were lost on much of the Japanese manufacturing community, as well...
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The Numbers Will Set You Free
May Alfred Sloan R.I.P.
by Mark Edmondson
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When Alfred P. Sloan was promoted to president of General Motors in 1919, he created the first management system capable of leading a large corporation: "managing by the numbers". Leading by monitoring key performance indicators was a breakthrough that enabled his senior management to understand their business units well enough to make strategic decisions.
Forty years later, when Harold S. Geneen took the helm of conglomerate International Telephone & Telegraph, the next evolution of the management system for large organizations was born: the professional manager. While Sloan was a manufacturing man, Geneen had begun his career as an accountant. That put him in the vanguard of a trend: In 1930s just 7% of CEOs came from financial backgrounds; by the 1960s the figure had climbed to 20%. (A decade later it was over 30%, but in recent decades has stabilized at about 20%.)
This new generation of polymaths would push Sloan's managerial revolution to its extreme. With the right financial tools, they believed, smart managers could run any assortment of businesses, whether it was (in ITT's case) making lawn products, publishing books, manufacturing auto parts, or selling Twinkies. The product wasn't the important thing. It was all about the numbers. It freed them from the details about their operations and people, and christened the era of the professional CEO...
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Book Review
Rebirth of American Industry: A Study of Lean Management
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We’re proud to announce that LEAN Affiliate Bill Waddell has published a new book on lean management.
If you’re fascinated by the history of lean, this book does not disappoint. However, as Bill Waddell points out in his introduction, this is not a history book... it is a management book. The central theme is to outline the core principles in the “Sloan/Dupont ROI model” that GM adopted after 1920 and to show how adhering to those principles makes it virtually impossible to adopt the principles inherent in Toyota's so-called "lean" operating system.
The supporting stories are well researched and help drive home the fallacies of the Sloan/Dupont ROI model. The author answers the question "why have so few American companies successfully transformed themselves into lean organizations?" We’re taken back to the origins of lean at Ford Motor Company and Toyota, and contrast this vision with the modern American manufacturer - such as Chrysler over building 400,000 cars in finished goods which required them to rent the empty Ford plant at Highland Park - ironically the birthplace of lean manufacturing. Chrysler’s Sloan-based management system then led them to believe that they achieved a profit.
Nothing is off limits. Waddell even takes the Shingo Prize to task for awarding prizes to operations like Delphi that ended up failing the gut test of lean: they didn't make money.
The book does well at showing how the "magic" of MRP software after 1960 further disguised the dead-weight impact of overhead cost. Waddell describes MRP as a “sophisticated effort to rationalize the damage to sound operations caused by following the Sloan model.” He discusses the attempts to integrate lean with MRP... and correctly concludes that the only way to reconcile lean and MRP is to turn MRP off.
A must read for the lean executive.
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